Jul 04

Today’s News 4th July 2022

  • 'Reset' This!
    ‘Reset’ This!

    Authored by Michael Walsh via AmericanMind.org,

    “The following is an excerpt from Michael Walsh’s forthcoming book, Against the Great Reset: Eighteen Theses Contra the New World Order, which will be published by Bombardier Books and be available October 18, 2022. Walsh has gathered a series of essays from among eighteen of the most eminent thinkers, writers, and journalists—including the American Mind’s own James Poulos, as well as Claremont Senior Fellows Michael Anton and the late Angelo Codevilla—to provide the first major salvo in the intellectual resistance to the sweeping restructuring of the western world by globalist elites.”

    Part I: The Problem

    What is the Great Reset and why should we care? In the midst of a tumultuous medical-societal breakdown, likely engineered by the Chinese Communist Party and abetted by America’s National Institutes of Health “gain of function” financial assistance to the Wuhan Institute of Virology, why is the Swiss-based World Economic Forum (WEF) advocating a complete “re-imagining” of the Western world’s social, economic, and moral structures? And why now? What are its aspirations, prescriptions, and proscriptions, and how will it prospectively affect us? It’s a question that the men and women of the WEF are hoping you won’t ask.

    This book seeks to supply the answers. It has ample historical precedents, from Demosthenes’s fulminations against Philip II of Macedon (Alexander’s father), Cicero’s Philippics denouncing Mark Antony, the heretic-hunting Tertullian’s Adversus Marcionem¸ and the philosopher Friedrich Nietzsche’s Nietzsche contra Wagner. Weighty historical issues are often best debated promptly, when something can yet be done about them; in the meantime, historians of the future can at least understand the issues as the participants themselves saw and experienced them. Whether the formerly free world of the Western democracies will succumb to the paternalistic totalitarianism of the oligarchical Resetters remains to be seen. But this is our attempt to stop it.

    So great is mankind’s perpetual dissatisfaction with its present circumstances, whatever they may be, that the urge to make the world anew is as old as recorded history. Eve fell under the Serpent’s spell, and with the plucking of an apple, sought to improve her life in the Garden of Eden by becoming, in Milton’s words, “as Gods, Knowing both Good and Evil as they know.” The forbidden fruit was a gift she shared with Adam; how well that turned out has been the history of the human race ever since. High aspirations, disastrous results.

    The expulsion from the Garden, however, has not discouraged others from trying. Indeed, the entire chronicle of Western civilization is best regarded as a never-ending and ineluctable struggle for cultural and political superiority, most often expressed militarily (since that is how humans generally decide matters) but extending to all things both spiritual and physical. Dissatisfaction with the status quo may not be universal—timeless and static Asian cultures, such as China’s, have had it imposed upon them by external Western forces, including the British and the Marxist-Leninists—but it has been a hallmark of the occident and its steady civilizational churn that dates back at least to Homer, Plato, Aeschylus, Herodotus, Pericles, and Alexander the Great, with whom Western history properly begins.

    The philosopher Friedrich Nietzsche, assaying the inelegant Koine, or demotic, Greek of the New Testament in Beyond Good and Evil, observed: “Es ist eine Feinheit, daß Gott griechisch lernte, als er Schriftsteller werden wollte—und daß er es nicht besser lernte”: “It’s a particular refinement that God learned Greek when he wanted to become a writer—and that he didn’t learn it better.” Nietzsche, the preacher’s son who became through sheer willpower a dedicated atheist, was poking fun at the fundamentalist belief that the Christian scriptures were the literal words of God himself (Muslims, of course, believe the same thing about the Koran, except more so). If something as elemental, as essential to Western thought as the authenticity of the Bible, not to mention God’s linguistic ability, could be questioned and even mocked, then everything was on the table—including, in Nietzsche’s case, God Himself.

    With the death of God—or of a god—Nietzsche sought liberation from the moral jiu-jitsu of Jesus: that weakness was strength; that victimhood was noble; that renunciation—of love, sex, power, ambition—was the highest form of attainment. That Nietzsche’s rejection of God was accompanied by his rejection of Richard Wagner, whose music dramas are based on the moral elevation of rejection, is not coincidental; the great figures of the nineteenth century, including Darwin and Marx, all born within a few years of each other, were not only revolutionaries, but embodied within themselves antithetical forces that somehow evolved into great Hegelian syntheses of human striving with which we still grapple today.

    Wagner, the Schopenhauerian atheist who staggered back to Christianity and the anti-Semite who engaged the Jew Hermann Levi as the only man who could conduct his final ode to Christian transfiguration, Parsifal. Charles Darwin, ticketed for an Anglican parsonage but mutating into the author of On the Origin of Species, The Descent of Man, and all the way to The Formation of Vegetable Mould through the Action of Worms. Karl Marx, the scion of rabbis whose father converted to Lutheranism and, like Wagner for a time, a stateless rebel who preached that the withering away of the state itself was “inevitable”—and yet the state endures, however battered it may be at the moment.

    It’s fitting that the “Great Reset of capitalism” is the brainchild of the WEF, which hosts an annual conference in the Alpine village of Davos—the site of the tuberculosis sanatorium to which the naïf Hans Castorp reports at the beginning of Thomas Mann’s masterpiece, The Magic Mountain. Planning to visit a sick cousin for three weeks, he ends up staying for seven years, “progressing” from healthy individual to patient himself as his perception of time slows and nearly stops. Castorp’s personal purgatory ends only when he rouses himself to leave—his Bildungsreise complete—upon the outbreak of World War I, in which we assume he will meet the death, random and senseless, that he has been so studiously avoiding yet simultaneously courting at the Berghof.

    Central Europe, it seems, is where the internal contradictions of Western civilization are both born and, like Martin Luther at Eisleben, go home to die. And this is where the latest synthetic attempt to replace God with his conqueror, Man, has emerged: in the village of Davos, in the canton of Graubünden, Switzerland: the site of the annual meeting of the WEF led by the German-born engineer and economist Klaus Schwab, born in Ravensburg in 1938, the year before Hitler and Stalin began carving up Poland and the Baltics.

    Once more into the breach, then: behold the present volume. In commissioning sixteen of the best, most persuasive, and most potent thinkers and writers from around the world to contribute to our joint venture, my principal concern has been to offer multiple analyses of the WEF’s nostrums and in so doing to go poet Wallace Stevens’s “Thirteen Ways of Looking at a Blackbird” a few better. Then again, given the surname of the WEF’s chief, perhaps a better, more potent literary citation might be Margret’s little ditty from the Büchner/Alban Berg expressionist opera, Wozzeck (1925): In’s Schwabenland, da mag ich nit—”I don’t want to go to Schwab-land.” Nor, as Hans Castorp’s journey illustrates, should anyone wish to visit Davos-land if he prizes his freedom, his possessions, and his sanity. To the Great Resetters, we are all ill, all future patients-in-waiting, all in dire need of a drastic corrective regimen to cure what ails us.

    In these pages, we shall examine the Great Reset from the top down. The eminent American historian Victor Davis Hanson begins our survey with “The Great Regression,” locating Schwab’s vision within its proper historical context. He is followed by Canada’s Conrad Black and America’s Michael Anton and their views of capitalism and socialism, with not a few attacks on conventional, osmotic wisdom that will both surprise and enthrall. Britain’s Martin Hutchinson outlines the contours of the Reset’s “Anti-Industrial Revolution,” even as the American economist David Goldman confronts both Schwab’s notion of the “Fourth Industrial Revolution” and China’s immanentizing its eschaton in real time, along with the Red Dragon’s commitment to the upending of Western civilization and its own Sino-forming of a post-Western world.

    American writer, editor, and publisher Roger Kimball tackles the implications of a neofascist Reset in his essay, “Sovereignty and the Nation-State,” both of which concepts are under attack in the name of “equality,” its totalitarian successor “equity,” and the political consequences of our re-embrace of Rousseauvian concepts as applied to governments. British historian Jeremy Black discusses the misuses toward which the study of history has been and will be put to by the Resetters. The late Angelo Codevilla contributes what alas became his final essay, “Resetting the Educational Reset,” to sound the tocsin about the dangerous left turn of the once-vaunted American educational system, now reduced to a shrill, sinistral shell of its former dispassionate glory.

    From Down Under, the Philippines-born Richard Fernandez twins two eternally competing faiths, religion and science; the American-born, Australian-based political sociologist Salvatore Babones contributes a remarkably clear explication of the kinds of transportation feasible under the “green energy” regimen the Reset seeks to impose upon us, and its practical and social implications. Writing from Milan, Alberto Mingardi, the director-general of the Istituto Bruno Leoni, gets to the heart of the Great Reset’s deceptive economic program with an essay concerning faux-capitalist “stakeholder capitalism” and its surreptitious replacement of shareholder capitalism in the name of “social justice.”

    The Great Reset, however, is not strictly limited to matters financial, pecuniary, or macroeconomic. Social and cultural spheres are of equal importance. James Poulos looks at the Reset’s unholy relationship with the predatory Big Tech companies that currently abrogate the First Amendment by acting as governmental censors without actually being commanded by an act of Congress or, increasingly, an arbitrary presidential mandate. From British Columbia, noted Canadian author and academic Janice Fiamengo weighs in on the destructive effects of feminism upon our shared Western culture while, on the lighter side, Harry Stein examines the history of American humor—which in effect means worldwide humor—and how the leftist takeover of our shared laugh tracks has resulted in a stern, Stalinist view of what is and what is not allowed to be funny.

    The British writer Douglas Murray has a go at the permissible future of Realpolitik under the panopticonic supervision of the Reset, the Chinese Communist Party, and the Covid hysterics, while the American journalist John Tierney lays out the road to civilizational serfdom that the unwarranted panic over the Covid-19 “pandemic” has triggered during its media-fueled run between 2019 and 2022. My contribution, in addition to this Introduction, is an examination of the Reset’s—and, historically, elitist tyranny’s—deleterious effects on Western culture: the very thing that gave birth to our notions of morality and freedom.

    At its heart, the Great Reset is a conceited and self-loathing central-European blitzkrieg against the cultural, intellectual, religious, artistic, physical, and, most of all, moral inheritance we have received from our Greco-Roman forebears. This has been latterly shorthanded, with the rise of “wokeness,” to “white” culture. Typically racialist, if not outright racist, the cultural Marxists behind wokeness insist on reducing humanity to its shades of skin color and then claiming that although all skin colors should achieve in exact same proportions to their share in a given population, some skin colors are better than others and any skin color is preferable to white. It’s a deeply repellent principle that masquerades as a perversion of Judeo-Christianity but is in fact a simultaneous attack on individuality and merit that seeks to roll back the scientific and cultural advances of the past two millennia, wielding both science and culture as weapons against our shared technological and moral heritage.

    The goal, as always, is power—the eternal fixation of the socialist Left…

    Tyler Durden
    Sun, 07/03/2022 – 23:45

  • Chicago Violence: 7 Killed, 29 Others Shot Over Fourth of July Weekend
    Chicago Violence: 7 Killed, 29 Others Shot Over Fourth of July Weekend

    By Jack Phillips of The Epoch Times

    At least seven people were killed and 29 more were injured in shootings across Chicago over the Fourth of July weekend, officials said on Sunday morning.

    Authorities said that a male and another male were shooting at each other at the 2200 block of South Wentworth Avenue at around 10:50 p.m. A 24-year-old unidentified woman was shot in the torso and was later pronounced dead at Stroger Hospital, officials told the Chicago Sun-Times and ABC7.

    The incident left a 42-year-old injured, and an official said she’s in good condition at a nearby hospital, the paper reported. One of the suspects, a 38-year-old male, was shot in the buttocks and is in critical condition in Northwestern Memorial Hospital, authorities said.

    Early on Sunday, a 35-year-old male was shot dead at around 3 a.m. while in a vehicle in Brighton Park, officials said. The male was in the passenger seat as a female driver was driving a car on the 3800 block of South Kedzie Avenue when he was hit in the neck by gunfire.

    And on Friday, authorities said a 26-year-old male was shot and killed in the South Side’s Englewood district. The male was outside about 5:45 p.m. in the 6500 block of South Wolcott Avenue when someone approached and shot him.

    On Sunday, two people were injured and one person—a 24-year-old male—died in a shooting at Grand Crossing on the South Side, police said. They were shot in the backyard of a house in the 7000 block of South Harper Avenue at around 5:30 a.m. local time.

    Police said that in another incident, a 29-year-old male, identified as Keishone Roberts, was shot dead in the 4300 block of West Van Buren Street in West Garfield Park, the paper reported. He was shot several times after someone approached him and opened fire. He was pronounced dead at Stroger Hospital sometime later.

    Around midnight Saturday, a 30-year-old male was shot and killed in the 9000 block of South Escanaba Avenue when someone shot him in the head, police said. Other details about the incident weren’t provided.

    Authorities also confirmed that a man was shot and killed while riding a bike in the 2100 block of East 71st Street at around 4 p.m. Saturday. The man, 26, was struck in the head and arm before he was taken to a nearby hospital and was later pronounced dead.

    During the Fourth of July weekend in 2021, more than 100 people were shot, of which 19 died. That prompted Chicago Police Chief David Brown to say that residents should expect more officers on the streets this weekend.

    “While I won’t give a number, we do have adequate resources … where we need them,” Brown said last week, according to reports. “Navy Pier obviously is a focus. All of our high-violence areas—obviously the top 55 beats—are a focus. As well as areas within every neighborhood” and “downtown.”

    And last week, officials said that a 19-year-old male suspect, Anthony Heredia, was charged in the fatal shooting of a 17-year-old girl in a Chicago parking lot of a business. Police told Fox32 that the girl approached Heredia who produced a gun and fired shots at her.

    Tyler Durden
    Sun, 07/03/2022 – 23:05

  • Starlink Wins FCC Approval For In-Motion Use On Airplanes And Cruise Ships 
    Starlink Wins FCC Approval For In-Motion Use On Airplanes And Cruise Ships 

    The Federal Communications Commission (FCC) granted Elon Musk’s SpaceX permission to provide Starlink high-speed satellite internet to users in vehicles, vessels, and aircraft, potentially changing the game regarding the current dial-up speeds on commercial jets and cruise ships. 

    In its authorization memo dated Thursday, the FCC said, “We agree with SpaceX and Kepler that the public interest would benefit by granting with conditions their applications. Authorizing a new class of terminals for SpaceX’s satellite system will expand the range of broadband capabilities to meet the growing user demands that now require connectivity while on the move, whether driving an RV across the country, moving a freighter from Europe to a U.S. port, or while on a domestic or international flight.”

    This permission is crucial for SpaceX to expand its high-speed satellite internet service on commercial airline carriers. It has signed deals with Hawaiian Airlines and semiprivate charter provider JSX. 

    Last month, Royal Caribbean Group requested the FCC to immediately clear the way for next-generation high-speed internet on cruise ships. Just like airlines, cruise ship internet speeds while sailing range between 3-5 Mbps for download, very similar to speeds to ones in commercial jets. For reference, the average US household has a download speed of about 43 Mbps. 

    The age of remote working and the internet of everything is pushing a need for high-speed satellite internet. 

    The FCC’s authorization also allows semi-trucks, RVs, and anything that moves, even a Tesla, to use Starlink for portable use. 

    However, there is a condition the FCC noted for in-motion Starlink service. SpaceX must “accept any interference received from current and future services authorized.” 

    Bloomberg notes SpaceX has more than 2,500 satellites in low Earth orbit, serving at least a half-million Starlink customers worldwide. Here’s a coverage map:

    Speedtest.net clocked Starlink’s average internet speed in the US at around 90.55 Mbps in 1Q22, up 38% from 65.72 Mbps YoY. Imagine receiving those speeds on a commercial jet and/or cruise ship — would change the game of remote working. 

    Tyler Durden
    Sun, 07/03/2022 – 23:05

  • China Tightens Rules For Online Platforms, Requiring Companies To Authenticate Users' Identities
    China Tightens Rules For Online Platforms, Requiring Companies To Authenticate Users’ Identities

    Authored by Kane Zhang via The Epoch Times,

    The Cyberspace Administration of China issued new regulations on June 27 requiring all online platform operators to authenticate users’ identities and verify the account information submitted by users during registration.

    The new regulations require the network information service provider to display user IP addresses on their page of account information, which would facilitate Beijing’s monitoring of user locations.

    The new rules will take effect on Aug. 1, when companies will need to validate every user’s online identity.

    ‘Illegal’ Posts Critical of Regime

    Current affairs commentator Lu Bei told The Epoch Times that the new rules allow the regime to maintain its control over information as it faces growing criticism online.

    Lu said that Beijing aims to extend its centralized control of information systems into citizens’ everyday lives, supervising their every move. The regime has been know to use network technology in a way that violates the rights and privacy of ordinary citizens, while at the same time failing to monitor the movement of criminals.

    On June 28, China’s Ministry of Public Security said on its public WeChat account that its cybersecurity department had investigated more than 600 cases of “illegal” posts by the “internet water army” or “internet navy”—many fake accounts that get paid to post positive comments to inflate companies’ online image—and arrested more than 4,000 suspects, according to the state-run People’s Daily.

    The report said that those commentators had spread unfavorable views of China’s economy, and that some had released “illegal and harmful information to manipulate or disrupt the order of online public opinion.”

    Lu believes that Beijing’s crackdown on the so-called “illegal internet navy” is to keep people from talking about hot topics, such as the “Iron Chain Woman” human trafficking scandal, the “nightmare” lockdowns in Shanghai, the Tangshan women-beating incident, and the Zhengzhou bank depositor incident.

    “Any topic that concerns the ordinary citizen are suppressed, and inappropriate comments are filtered out, taken down, or attached with warning labels. People are deprived of freedom and labeled criminals for ‘picking quarrels and provoking trouble,’” Lu added.

    “Meanwhile, the ‘legal’ Internet navy is paid for by the Chinese Communist Party. They are reportedly paid ‘fifty cents’ for every pro-CCP remark or in exchange for a reduced jail sentence.”

    Tyler Durden
    Sun, 07/03/2022 – 22:25

  • The Economic Implications Of The US Urban Exodus
    The Economic Implications Of The US Urban Exodus

    The Urban exodus documents here extensively over the past two years has had profound consequences on the US economy.

    Starting with the pandemic, and subsequently accelerating due to the historic riots, unprecedented lawlessness and historic crime rates unleashed by democratic administrations in major US metroareas, urban exodus has had a “Donut Effect,” causing greater domestic migration out of urban counties and into the surrounding suburbs. At the same time, increased adoption of hybrid work and remote work have shifted the geographic location of demand for food and other services. The resulting temporary geographical mismatch in labor demand and supply could take time to resolve.

    Addressing the topic of economic implications from urban exodus, a recent note from BofA economist Stephena Juneau writes that the labor market is in the midst of one of the most rapid recoveries in history. After falling by more than 21M from February 2020 to April 2020, private payrolls are now just about 200k below pre-pandemic levels. But this labor market recovery has been marked by substantial geographical variation. The growth in private employment has been much lower in bigger city centers compared to the surrounding suburbs. 

    In its note (available to professional ZH subscribers), BofA digs deeper into this geographic variation by focusing on 11 of the largest Metropolitan Statistical Areas (MSA)—New York, Los Angeles, Chicago, Boston, Dallas-Fort Worth, Houston, Miami, Philadelphia, Washington DC, Atlanta and San Francisco. The recovery of private employment in these city centers has lagged behind the recovery in the surrounding suburbs (yet another failing by mostly Democratic cities). Indeed, BofA finds that aggregate private payrolls in the urban counties are down 3.8% from the pre-pandemic level in 2019 Q4 (Exhibit 1). Meanwhile, the surrounding suburbs have seen only a 1.5% drop in private employment.

    The scientific name for the migration from cities to suburbs was given by Ramani and Bloom (2021) as “the Donut effect.” Data from William H. Frey at the Brookings institute on the basket of 11 MSAs lends support to this effect. It shows that urban counties have seen a significant decline in domestic migration and a decline in overall population.

    Suburbs, on the other hand, experienced an increase in domestic migration based on change of address data from USPS. One of the main reasons for this is that businesses are adopting official remote work or hybrid work policies (the other big reason(s) is that most big cities have become socialist hellholes “worse than Afghanistan”, as even Ken Griffin recently declared before fleeing the Democratic bastion of Chicago for Miami).

    This has led to both changing residences and a slow and incomplete recovery in office occupancy. More densely populated city centers like NY and SF are seeing a much slower recovery as compared to less densely populated city centers like Houston and Dallas.

    The population shift and the drop in full time commuters has led to decreased mobility towards “retail & recreation” in the city centers as compared to the suburbs. To a large extent, businesses in the leisure/hospitality sector in the city centers like restaurants, cafes, retail stores depend on the workers who commute there during the week. Additionally, revenue from tourism that feeds into these sectors hasn’t picked up to its pre pandemic trend yet. This has caused a shift in labor demand from the city centers to the suburbs, helping cause a weaker job recovery in cities. Combine this with workers leaving the labor force and the labor shortage is particularly high in the suburbs.

    Mismatches in the labor market add to the supply constraints on the economy. Hence they are part of the ongoing supply-driven inflation. In economic jargon, if they persist they raise the inflation neutral unemployment rate. In BofA’s view, this could take some time to resolve. It is hard for low wage workers to follow jobs into the suburbs because of limited low cost housing. As workers start spending a bit more time in the office, that will help ease the imbalance, but a return to the old living and commuting patterns is highly unlikely.

    This geographical shift will eventually cause the businesses in the leisure and hospitality space in the city centers to either downsize/close or shift operations to the suburbs to meet the increased demand there.

    The broader mismatch between labor supply and demand should also slowly improve. A recent survey conducted by Indeed shows that job seeker interest in high-touch jobs is in fact rebounding. This should help in resolving the geographical labor demand-supply mismatch. So the Fed will get some help in rebalancing the labor market, but they still need to bring job growth down below 100k and engineer a moderate upward shift in the unemployment rate. Then again, with even Zuck warning that mass layoffs are coming, we may be just a few days away from a “shock” negative jobs print.

    Tyler Durden
    Sun, 07/03/2022 – 21:45

  • The Supreme Court Marshal Urges States To Crack Down On Protesters
    The Supreme Court Marshal Urges States To Crack Down On Protesters

    Authored by Jonathan Turley,

    In a rare move, Supreme Court Marshal Gail Curley has sent letters to Maryland Gov. Larry Hogan, Montgomery County Executive Marc Elrich, and Virginia Gov. Glenn Youngkin demanding that authorities put an end to picketing and “threatening activity” outside the homes of SCOTUS justices.

    The letter seeks to use state laws to achieve what the Justice Department has clearly rejected under federal law. If the letter prompts arrests, we could see a major free speech challenge in the courts. The timing of the letter, however, is particularly interesting and may reflect a recognition of the limits of the federal law.

    Like most Americans, I have denounced these protests targeting the homes of justices as excessive and reckless (though one law professor actually suggested that such protests could be more aggressive). However, I have also questioned the use of a federal law to arrest protesters.

    Under a federal law, 18 U.S.C. 1507, any individual who “pickets or parades” with the “intent of interfering with, obstructing, or impeding the administration of justice, or with the intent of influencing any judge, juror, witness, or court officer” near a U.S. court or “near a building or residence occupied or used by such judge, juror, witness, or court officer” will be fined or “imprisoned not more than one year, or both.”

    I believe that a court would declare the use of the law against protesters on public sidewalks to be unconstitutional under the First Amendment. Indeed, if you apply the broad interpretation of the law, even protests outside of the Supreme Court building could result in arrests since courthouses are also included.

    However, the timing is particularly interesting. After the release of the decision in in Dobbs v. Jackson Women’s Health Organization, I noted that it would be even harder to use this law because the statute refers to “interfering with, obstructing, or impeding the administration of justice, or with the intent of influencing any judge … in the discharge of his duty.” With the release of the decision, there is no chance that the protesters are interfering, impeding, or influencing the decision. Thus, even if the constitutional arguments were rejected, a court could question whether the law can be read as applying to protests generally against the justices for their views.

    That is what makes the date so interesting. Dobbs came out on June 24, 2022. One week later, Curley sought enforcement of state laws as an alternative to federal enforcement. It may reflect the view that, even if the law is constitutional to arrest protesters, it would be narrowly construed in light of the fact that Dobbs is now on the books. Since it was clear for weeks that the Justice Department would not enforce the law to arrest protesters outside of these homes, the timing of the letter could reflect a dwindling likelihood of enforcement in light of the end of the term.

    Curley wrote Gov. Hogan: “I would respectfully request that you direct the Maryland State Police to enforce Maryland and Montgomery County laws that squarely prohibit picketing at the homes of Supreme Court Justices who reside in Maryland.”

    The state laws, however, would still face the same constitutional challenges. While noise and other non-content-based regulations can be enforced, barring any protests that do not block streets could be difficult to maintain.

    Both the Maryland and Virginia governors responded by calling on Attorney General Merrick Garland to use his authority under federal law to stop the protesters.

    There is an interesting question of whether Curley consulted with Chief Justice John Roberts. There is usually considerable coordination with the Chief Justice, but the approval of Roberts could cause later ethical issues if a challenge comes to the Court on appeal. If Roberts green lighted the letters, he is directly involved in the decision and effectively endorsed the underlying interpretation (and use) of the state laws. In such a case, he should recuse himself from any appeal.

    Roberts would not be the only one with conflict issues. All of the justices would be beneficiaries of such enforcement, but the six conservative justices are the subject of these specific protests. They could effectively resolve such conflicts by simply denying review in any challenge and allow the lower courts to be the final word on the constitutionality of such enforcement.

    Yet, some justices might not be pleased by the Marshal essentially advancing such a legal claim in calling for this crackdown on protesters. By sending the letter, Curley is speaking as a high-ranking official in the Judicial Branch. She is clearly not just encouraging the use of these laws, but implicitly saying that these laws can be used in this way to stop any further protests at these homes.

    What is striking about this effort is that Curley has reportedly not reached out to FBI for assistance in catching the leaker of the Dobbs decision. The Supreme Court is just a few blocks away from the leading expert agency in the world on computer and forensic investigations. Yet, Roberts and Curley have kept this investigation confined to their relatively small and inexperienced staff. That has left many of us perplexed since this is one of the greatest attacks on the internal operations and integrity of the Court in its history.

    The letter could well prompt a crackdown on the protesters. We could then watch these constitutional issues play out in court soon.

    Here is the Maryland letter: July-1-2022-letter-to-Hon.-Larry-Hogan

    Tyler Durden
    Sun, 07/03/2022 – 21:05

  • Visualizing China's Rise To Economic Superpower
    Visualizing China’s Rise To Economic Superpower

    As the world still grapples with supply-chain backlogs (partially) caused by China’s strict Covid-19 policies, it has become painfully obvious how vulnerable the global economy is to national or even regional disruptions, especially if they happen in China, the world’s number one supplier of goods.

    In fact, as Statista’s Felix Richter explains below, over the past few decades, China has grown to become the world’s manufacturing hub and largest goods exporter by a significant margin, turning it from emerging market into economic superpower. According to estimates from the IMF’s latest World Economic Outlook, the country will account for 18.8 percent of the world’s GDP based on purchasing power parity (PPP). That’s up from just 8.1 percent two decade ago, when both the United States and the EU were miles ahead of China’s economic output.

    Infographic: China's Rise to Economic Superpower | Statista

    You will find more infographics at Statista

    Over the past 20 years, both the U.S. and the European Union have seen their economic superiority challenged, as new powers, such as China, India and others have emerged. While the U.S. saw its share of global GDP decline from 19.8 to 15.8 percent between 2002 and 2022, the EU’s share dropped from 19.9 to 14.8 percent of the same period.

    The gap between China, the U.S. and the EU will likely widen over the next few years, as the economic outlook for the latter two is cloudy with a chance of recession, while China is expected to continue growing at mid-single-digit growth rates.

    Tyler Durden
    Sun, 07/03/2022 – 20:25

  • The Economic Growth That Never Was
    The Economic Growth That Never Was

    Authored by Tuomas Malinen via The Epoch Times,

    In March 2019, we published an ominous special report, entitled: Why the global growth model is broken. In it, we explained a troubling phenomenon: productivity growth in the world economy had stalled in 2011 and started to decline.

    We first noticed this in September 2017, and the situation has remained the same ever since. We named the period as the “Great Stagnation.”

    A figure presenting the growth of total factor productivity (TFP) in the regions of the world from 1990 to 2021. (GnS Economics, Conference Board)

    The total factor productivity, or TFP, presented in the figure above measures the share of GDP growth that cannot be accounted for by capital investment (in equipment and machinery) and the quantity and the improved quality of the labor force (skills and training). Effectively, TFP is the “unexplained” element of economic growth.

    Solow Model of Economic Growth (1956) first suggested that one can find the value of TFP by collecting data from observed factors for capital, labor, and economic growth, and then, by applying some basic statistical estimation techniques to the growth model, calculate TFP, or “Solow Residual” as the remainder. It was also discovered that a large part of GDP growth was explained by technological innovations rather than purely by capital and labor, which the “residual” or TFP represented (see, e.g., our blog for more info).

    In the December 2020 forecasting report, we postulated the perplexing problem of stagnated productivity growth as: “Stagnating global productivity growth is extremely worrying, because it implies that if firms are unable to increase their productivity, they will be unprofitable as well. And when their indebtedness grows yet profitability stagnates or falls, their ability to service debt will also diminish over time.”

    And we continued: “Decreasing productivity growth thus implies that the ability to increase profitability and service debt has diminished for several years—at the same we have become ever more indebted! Global debt is expected to reach an astonishing $277 trillion U.S. dollars, or around 350 percent of global GDP by the end of the year.”

    How did we end up here?

    It turns out—or we consider it the most plausible explanation—that the continuous monetary and fiscal stimulus by central banks and governments has destroyed or seriously damaged two main forces behind economic growth: creative destruction and the risk-and-reward relationship.

    Long-term economic growth is driven by technical innovations, which increase productivity. What this means is that innovations, from the spinning-jenny (practically a first actual industrial machine) to industrial robots (and beyond), grow the productivity of a human worker. This also increases his or her wage and makes products cheaper. This process, i.e., the growth of productivity, is behind the spectacular rise in living standards since the 18th century.

    However, this process assumes a crucial element dubbed as creative destruction due to its dual nature. It implies, simply, that more efficient (more productive) methods will replace the old and inefficient. This requires that old firms fail (go bankrupt) and new firms take their place. This process is at the heart of the capitalist market economy.

    Both gains and failures in the private sector drive economic progress. The former accumulates income and capital, while the latter uncovers sustainable businesses, setting the stage for creative destruction. Government plays an important role by setting laws, governing human and property rights, and guaranteeing income through social security, but it is, ultimately, the private sector and markets that drive progress. Do not let the MMT (Modern Monetary Theory) crowd tell you otherwise! As socialist market economy experiments have recurrently shown throughout history, this risk-and-reward relationship is essential for this creative destruction to work and for the economy to grow, dynamically.

    The reason that our economies have grown, relatively decently, after the Panic of 2008, is presented in the figure below.

    A figure presenting the ratios of debt to gross domestic product between main sectors of the economy in advanced countries from 1990 Q4 to 2021 Q3. (GnS Economics, BIS)

    It shows especially that government debt has grown quite a bit faster than GDP since 2008 in advanced (rich) economies. Without the massive growth of government debt, the world economy would not have grown at this speed. We have been in constant resuscitation since 2008!

    This has also made our economies fragile. Currently, they tend to succumb without constant support or at least when there are efforts to withdraw it. I have explained in my previous column why central banks have been forced to bail out the global economy and markets several times during the past five years. Now, with the aggressive rate hikes and balance sheet run-off (QT) of the Federal Reserve, we are fast approaching another breaking point, which is likely to require a full-scale bailout of the world economy.

    The European Central Bank is way ahead of the Fed. They are already planning an anti-fragmentation tool for the eurozone. In it, they plan to support the sovereign debt markets of the weakest members of the eurozone. Socialization of Europe is proceeding fast.

    There are also rumors of an another, considerably large “bailout” fund of the EU in the making. Just two years ago, EU members agreed on a 750 billion euro Recovery Fund.

    Back in 2020, Dr. Peter Nyberg, a retired director general of the Financial Markets Department at the Finnish Ministry of Finance, and I warned about the Stealth Federalization of the EU. The sovereignty of EU member states had been eroding slowly, but with the Recovery Fund, it took a massive leap forward. Another such a common-debt-scheme would effectively seal our fate.

    Alas, we have lived in a “mirage” of an economic recovery since the Great Financial Crisis. Our leaders on both sides of the Atlantic have not allowed the normal economic process, especially bankruptcies and failures, to clean our economies from unproductive, “parasitic” activities, over-indebtedness, and (zombified) companies.

    This is why our economies are so weak, and this is why we are heading either to a complete socialization of the world economy or an epic economic collapse. We, the people, have let our political leaders to “sleepwalk” us into this cataclysmic watershed. Now would be an excellent time to wake up.

    Tyler Durden
    Sun, 07/03/2022 – 19:45

  • Several Dead After Gunman Opens Fire At Copenhagen Mall
    Several Dead After Gunman Opens Fire At Copenhagen Mall

    Update (1910ET): ‘Several’ people have died and many more left injured following Sunday’s shooting at a Copenhagen mall.

    Officers were called to the Fields shopping center at 5:30 p.m. local time on Sunday following reports of a gunman firing shots. According to Chief police inspector Soren Thomassen, a 22-year-old Danish national was arrested in connection with the shooting.

    Thomassen added that the shooter targeted several areas within the mall, according to DW.

    “Several were killed, even more wounded. Innocent families shopping or eating out. Children, young people and adult,” said Prime Minister Mette Frederiksen in response to the shooting, adding that it was “heartbreaking” and “pointless.”

    “I want to encourage Danish people to stand together and support each other at this difficult time,” she added.

    Danish newspaper Berlingske spoke to an eyewitness at the mall, who said shoppers rushed to leave the mall when the shooting began.

    “It was crazy,” said store worker Chelobeth Johansen. She said she heard several shots and could see people had started running before she shut the store and left the mall herself.

    “People first thought it was a thief … Then I suddenly hear shots and threw myself behind the counter inside the store,” another eyewitness Rikke Levandovski told TV2.

    “He is just shooting into the crowd, not up in the ceiling or into the floor,” she added.

    Shopper Laurits Hermansen told DR that he was in a clothing store with his family when he heard “three-four bangs. Really loud bangs. It sounded like the shots were being fired just next to the store.”

    The shooting took place just hours before pop star Harry Styles was to play a sold-out concert at the Royal Arena, which is just a short drive from the mall.

    Danish media reported that the gig was called off at the last minute. -DW

    Unconfirmed footage shows the suspected gunman holding a rifle to his head just one day before the shooting.

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    *  *  *

    Update (1322ET): DW News and Sky News both report one person has been arrested at the Field’s shopping mall in the capital of Copenhagen after a shooting inside the mall left several injured. 

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    * * * 

    Copenhagen Police said gunshots were reported at the Fields shopping center in the capital of Copenhagen on Sunday evening. 

    “We are still present, shots have been fired and several people have been hit. We work on-site. People in the Fields must stay and await the police,” Copenhagen Police tweeted.

    Sky News now reporting the incident. 

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    Here’s an alleged video from within the shopping mall at the time of the incident. 

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    People were seen fleeing the mall. 

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    Danish radio said heavily armed police have arrived on the scene as well as ambulances. 

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    There are no official reports of how many people may have been killed or wounded.

    *Developing 

    Tyler Durden
    Sun, 07/03/2022 – 19:11

  • Understanding The Economic Crisis In Sri Lanka
    Understanding The Economic Crisis In Sri Lanka

    Sri Lanka is currently in an economic and political crisis of mass proportions, recently culminating in a default on its debt payments. The country is also nearly at empty on their foreign currency reserves, decreasing the ability to purchase imports and driving up domestic prices for goods.

    As Visual Capitalist’s Avery Koop details below, there are several reasons for this crisis and the economic turmoil has sparked mass protests and violence across the country. This visual breaks down some of the elements that led to Sri Lanka’s current situation.

    A Timeline of Events

    The ongoing problems in Sri Lanka have bubbled up after years of economic mismanagement. Here’s a brief timeline looking at just some of the recent factors.

    2009

    In 2009, a decades-long civil war in the country ended and the government’s focus turned inward towards domestic production. However, a stress on local production and sales, instead of exports, increased the reliance on foreign goods.

    2019

    Unprompted cuts were introduced on income tax in 2019, leading to significant losses in government revenue, draining an already cash-strapped country.

    2020

    The COVID-19 pandemic hit the world causing border closures globally and stifling one of Sri Lanka’s most lucrative industries. Prior to the pandemic, in 2018, tourism contributed nearly 5% of the country’s GDP and generated over 388,000 jobs. In 2020, tourism’s share of GDP had dropped to 0.8%, with over 40,000 jobs lost to that point.

    2021

    Recently, the Sri Lankan government introduced a ban on foreign-made chemical fertilizers. The ban was meant to counter the depletion of the country’s foreign currency reserves.

    However, with only local, organic fertilizers available to farmers, a massive crop failure occurred and Sri Lankans were subsequently forced to rely even more heavily on imports, further depleting reserves.

    April 2022

    In early April this year, massive protests calling for President Gotabaya Rajapaksa’s resignation, sparked in Sri Lanka’s capital city, Colombo.

    May 2022

    In May, pro-government supporters brutally attacked protesters. Subsequently, Prime Minister Mahinda Rajapaksa, brother of President Rajapaksa, stepped down and was replaced with former PM, Ranil Wickremesinghe.

    June 2022

    Recently, the government approved a four-day work week to allow citizens an extra day to grow food, as prices continue to shoot up. Food inflation increased over 57% in May.

    Additionally, the increasing prices on grain caused by the war in Ukraine and rising fuel prices globally have played into an already dire situation in Sri Lanka.

    The Key Information

    “Our economy has completely collapsed.”

    – PRIME MINISTER RANIL WICKREMESINGHE TO PARLIAMENT LAST WEEK.

    One of the main causes of the economic crisis in Sri Lanka is the reliance on imports and the amount spent on them. Let’s take a look at the numbers:

    • 2021 total imports = $20.6 billion USD

    • 2022 total imports (to March) = $5.7 billion USD

    In contrast, the most recent reported foreign currency reserve levels in the country were at an abysmal $50 million, having plummeted an astounding 99%, from $7.6 billion in 2019.

    Some of the top imports in 2021, according to the country’s central bank were:

    • Refined petroleum = $2.8 billion

    • Textiles = $3.1 billion

    • Chemical products = $1.1 billion

    • Food & beverage = $1.7 billion

    Of course, without the cash to purchase these goods from abroad, Sri Lankans face an increasingly drastic situation.

    Additionally, the debt Sri Lanka has incurred is huge, further hampering their ability to boost their reserves. Recently, they defaulted on a $78 million loan from international creditors, and in total, they’ve borrowed $50.7 billion.

    The largest source of their debt is by far due to market borrowings, followed closely by loans taken from the Asian Development Bank, China, and Japan, among others.

    What it Means

    Sri Lanka is home to more than 22 million people who are rapidly losing the ability to purchase everyday goods. Consumer inflation reached 39% at the end of May.

    Due to power outages meant to save energy and fuel, schools are currently shuttered and children have nowhere to go during the day. Protesters calling for the president’s resignation have been camped in the capital for months, facing tear gas from police and backlash from president Rajapaksa’s supporters, but many have also responded violently to pushback.

    India and China have agreed to send help to the country and the the International Monetary Fund recently arrived in the country to discuss a bailout. Additionally, the government has sent ministers to Russia to discuss a deal for discounted oil imports.

    A Foreshadowing for Low Income Countries

    Governments need foreign currency in order to purchase goods from abroad. Without the ability to purchase or borrow foreign currency, the Sri Lankan government cannot buy desperately needed imports, including food staples and fuel, causing domestic prices to rise.

    Furthermore, defaults on loan payments discourage foreign direct investment and devalue the national currency, making future borrowing more difficult.

    What’s happening in Sri Lanka may be an ominous preview of what’s to come in other low and middle-income countries, as the risk of debt distress continues to rise globally.

    The Debt Service Suspension Initiative (DSSI) was implemented by G20 countries, suspending nearly $13 billion in debt from the start of the pandemic until late 2021.

    Some DSSI and LIC countries facing a high risk of debt distress include Zambia, Ethiopia, and Tajikistan, to name a few.

    Going forward, Sri Lanka’s next steps in managing this situation will either serve as a useful exam for other countries at risk or a warning worth heeding.

    Tyler Durden
    Sun, 07/03/2022 – 19:05

  • To Avoid Civil War, Learn To Tolerate Different Laws In Different States
    To Avoid Civil War, Learn To Tolerate Different Laws In Different States

    Authored by Ryan McMaken via The Mises Institute,

    Most commentary on the Supreme Court’s decision in Dobbs v. Jackson Women’s Health Organization—which overturns Roe v. Wade—has focused on the decision’s effect on the legality of abortion in various states. That’s an important issue. It may be, however, that the Dobbs decision’s effect on political decentralization in the United States is a far bigger deal.

    After all, the ruling isn’t so much about abortion as it is about the federal government’s role in abortion. State governments are free to make abortion 100 percent legal within their own borders. Some states have already done so. The court’s ruling limits only the federal government’s prerogatives over abortion law, and this has the potential to lead to many other limitations on federal power as well. In this way, Dobbs is a victory for those seeking to limit federal power. 

    The decentralization is all to the good, and there’s nothing novel about it. Historically, state laws in the US have varied broadly on a variety of topics from alcohol consumption to divorce. This was also true of abortion before Roe v. Wade. 

    Moreover, decentralizing abortion policy in this way actually works to defuse national conflict. This is becoming even more important as cultural divides in the United States are clearly accelerating and become more entrenched. Rather than fight with increasing alarm and aggression over who controls the federal government—and thus who imposes the winner’s preferences on everyone else—people in different states will have more choices in choosing whether to live under proabortion or antiabortion regimes. In other words, decentralization forces policymakers to behave as they should in a confederation of states: they must tolerate people doing things differently across state lines.  This will be essential in avoiding disaster, and laissez-faire liberals (i.e., “classical liberals”) have long supported decentralization as a key in avoiding dangerous political conflicts. Ludwig von Mises, for example, supported decentralization because, as he put it, it “is the only feasible and effective way of preventing revolutions and civil … wars.”

    The Impulse to Use Federal Power to Force Policy on Everyone

    Law has never been uniform across state lines in the United States, although this was not for a lack of trying on the part of the federal government. As the power of the federal government grew throughout the twentieth century, the central government repeatedly sought to make policy uniform and put it under the control of federal courts and regulatory agencies. Prior to Roe v. Wade, abortion was a state and local matter only. Before the drug war, the federal government did not dictate to states what plants they should let their citizens consume. Before the Volstead Act, “dry” states and “wet” states had far different policies on alcohol sales. Some states had lenient divorce laws. Some did not. Some states allowed gambling. Even immigration was once the domain of state government. Although some federal law enforcement agents existed in the nineteenth century, “law and order” was overwhelmingly a state and local matter prior to the rise of agencies like the FBI. 

    The cumulative effect of making all these areas the prerogative of federal regulators, agents, and courts has been to convince many Americans that the United States government ought to federalize most areas of daily life. In the modern way of thinking, only less important or trivial matters are to be left up to the state and local governments. For many Americans, they learned to just think that it was abnormal for the state next door to have different gun policies or drug policies than one’s home state. 

    Drugs, Alcohol, and Guns

    In the past decade, this impulse to intervene in neighboring states has been highlighted by the de facto end of nationwide marijuana prohibition in the United States. Beginning in 2012 with Colorado and Washington State, recreational marijuana use has become essentially legal in nearly two dozen US states. This means a resident of one state can travel to a neighboring state to consume a drug that is illegal in his or her home state. Some state governments have a hard time dealing with this. Politicians in antimarijuana states complained that their citizens had too much access to prohibited substances. Not surprisingly, attorneys general in Nebraska and Oklahoma sued Colorado in federal court in an attempt to force Colorado to reimpose marijuana prohibition on its citizens. Fortunately, these lawsuits—which if successful would have greatly expanded federal power over states—failed. 

    Alcohol prohibition grew out of the same desire to force some states’ preferences on all other states. In 1917, only twenty-seven states embraced statewide prohibition. It took a constitutional amendment to impose prohibition on all the rest. 

    Moreover, laws governing the purchase and carry of firearms vary broadly from state to state, with “constitutional carry” allowing permitless carry in some states. Some states allow for private gun sales without any background checks. Other states greatly restrict these activities. Naturally, policy makers who oppose the freedom to carry firearms have sought for many decades to impose uniform gun policy nationwide. 

    Federal Centralization Run Amok: The Fugitive Slave Acts 

    The most notorious case of using the federal government to impose nationwide uniformity is likely the Fugitive Slave Acts (passed in 1793 and 1850). Contrary to the myth that slave owners hated a strong federal government and wanted only local control, slave drivers enthusiastically and repeatedly invoked the federal fugitive slave laws. This was done in order to force Northern governments to cooperate with Southern states in kidnapping runaway slaves and returning them to their “owners.” The Dred Scott decision extended federal protections of slavery even further, and the ruling allowed many slave owners to argue they could even take their slaves into nonslave states and territories, regardless of state and local laws prohibiting slavery.

    Many abolitionists refused to acknowledge federal prerogatives and actively opposed federal agents who attempted to enforce federal laws extending slavery beyond the slave states. Some Northern governments explicitly refused to cooperate with the Fugitive Slave Acts. So successful were these efforts to undermine federal law that South Carolina secessionists listed the failure of federal slave laws as a reason for secession in 1860. Slavery advocates were enraged by the idea that their neighbors in other states weren’t being forced to help prop up the slave system. 

    After Roe, States Are Quickly Decentralizing American Abortion Law

    In all of these cases, the perceived “answer” offered by proponents of legal uniformity was to bring in the federal government to force people in state A to do the bidding of people in state B. Thanks to the overturning of Roe, however, many states are moving in exactly the opposite direction. 

    Some states have moved toward prohibiting abortion within their own borders. But proabortion states are also taking some key legal steps toward further decentralizing policy. Policy makers in Massachusetts have moved to protect the state’s citizens from extradition to antiabortion states for abortion-related crimes. The state’s governor also signed an executive order prohibiting the state’s agencies “from assisting another state’s investigation into a person or entity” for abortion-related activities. New York’s governor has signed legislation “that shields [abortion] providers and patients from civil liability” in abortion-related claims. The message here: “Those laws in antiabortion states have no power here.”

    Centralization Breeds Conflict

    This is the way the system was designed to work. People can choose to live in state A, where abortion is illegal. But should some of those people travel to state B to get an abortion, state B ought to be under no obligation to help state A enforce its laws either inside or outside the state. To demand anything more than this inevitably ends up involving the federal government to impose new obligations on every state. (This strategy of centralizing power should not be confused with trying to directly change laws within those states. It is, of course, a good thing to pressure governments to end unjust laws from within, but such efforts are totally different than calling in the federal government to end abortion by federal fiat.)

    As we have seen with abortion, slavery, drugs, and guns, when the feds are involved, every national election ends up being a referendum on whatever issue is deemed so important that the federal government must impose one way of doing things on everyone. This only makes national politics even more nasty.

    The end of Roe v. Wade may end up emphasizing the political and cultural divisions in America by forcing many Americans to recognize that the United States is not one place. It is many places. This is not a problem, however, if we relearn that rather than employ federal coercion to “solve” the world’s problems, it’s perhaps better to tolerate others doing things differently in other parts of the world. On the other hand, if Americans can’t shake the idea that the regime must force one way of life on everyone, we can expect national political divides to grow ever more bitter. 

    Tyler Durden
    Sun, 07/03/2022 – 18:25

  • Apple Hikes iPhone 13 By 19% In Japan Months After CFO Cites FX Concerns
    Apple Hikes iPhone 13 By 19% In Japan Months After CFO Cites FX Concerns

    People in Japan who want the latest iPhone are going to have to pony up nearly 20% more, according to Nikkei Asia and confirmed by 9to5Mac.

    iPhone 13 Pro (left) and iPhone 13 Pro Max. David Phelan via Forbes

    While the iPhone 14 is set to launch in September, Apple hiked the the price of the existing iPhone 13 from 62,800 yen ($423) to 144,800 yen ($1,060), up from $423 and $899 respectively.

    According to 9to5Mac, the higher prices – which are still less than US consumers are paying – may be a reflection of a weakening yen.

    During an April 28 earnings release, Apple CFO Luca Maestri said that foreign exchange rates were becoming a problem for the company, as revenue forecasts are calculated in dollars, and turbulent FX rates will likely impact sales numbers for the June quarter.

    As you can see, iPhone prices in Japan were even lower than in the United States. Unfortunately, Japan’s local currency has lost about 15% of its value compared to the US dollar in the last three months, which ultimately has an impact on the price of imported products.

    Despite the price increase, iPhone sales in Japan seem to be doing well. Recent research shows that the new third-generation iPhone SE has been in strong demand in the Asian country, accounting for 18% of local smartphone sales in April. -9to5Mac

    Meanwhile, iPads are now 25% more expensive at 49,800 yen ($368), and the Apple Watch saw a boost as well. In June, there was a 10% price hike on MacBook Air and MacBook Pro models for the Japanese market.

    The higher price point all but ensures that the iPhone 14 will have a higher price in Japan compared to the iPhone 13’s launch price last year.

     

    Tyler Durden
    Sun, 07/03/2022 – 17:45

  • Shellenberger: Yes, You Can Blame Biden For High Energy Prices
    Shellenberger: Yes, You Can Blame Biden For High Energy Prices

    Authored by Michael Shellenberger via Substack,

    The experts were wrong once again…

    This July 4th, as you fill up your car or truck, you might be tempted to blame President Joe Biden for high gasoline prices.

    You shouldn’t, say some experts. It’s Russian President Vladimir Putin’s fault, they say. The US had to cut off Russian oil imports to punish Putin for invading Ukraine.

    Meanwhile, Biden himself has blamed the American energy industry.

    “At a time of war,” Biden wrote in an open letter to the industry on June 15, “high refinery profit margins being passed directly onto American families are not acceptable… companies must take immediate actions to increase the supply of gasoline, diesel, and other refined product.”

    But US refineries are already operating at 94 percent of their capacity, with US refineries in the Gulf of Mexico running at 98 percent, which is the highest rate in 30 years. Running refineries at a higher capacity than that risks damaging the equipment. As such, Biden isn’t just wrong, he insulted some of the hardest working people operating in one of the most dangerous industries in America.

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    But, on May 12, Biden’s Interior Department blocked a proposal to open up more than one million acres of land in Alaska for oil and gas drilling. Two days later, Biden’s Environmental Protection Agency blocked plans to expand an oil refinery in the US Virgin Islands.

    Biden and his defenders said he had to block the expansion of the Virgin Islands refinery, given how polluting it was.

    But had Biden’s EPA allowed the Virgin Island refinery to expand, the owners would have poured nearly $3 billion into retrofitting the plant so it produced gasoline and other products more cleanly, while significantly increasing production at the same time.

    Furthermore, anybody who cares about air pollution and climate change should want more oil and gas drilling, not less. US emissions declined 22% between 2005 and 2020, mostly because cheap natural gas has replaced coal.

    In truth, there are many things Biden could have done, and still should do, to lower energy prices. He could invoke the National Defense Act to accelerate the rate of oil and gas permits. He could set a floor of $80/barrel for re-filling the Strategic Petroleum Reserve (SPR), which would be a powerful incentive for the industry, because it would prevent prices from falling to unprofitable levels. Biden could announce trade agreements with American allies to supply them with liquified natural gas, which would incentivize more natural gas production and lower prices.

    If Biden got America on a wartime footing, as he should be given Russia’s aggression in Europe, we would see the lowering of oil, gas and petroleum prices in less than one year.

    Why won’t Biden do it?

    Because he has declared war on fossil fuels.

     “I guarantee you, we’re going to end fossil fuel,” Biden promised a student climate activist in 2019.

    “I am not going to cooperate with them,” he said, referring to the oil and gas industry.

    And indeed, he hasn’t.

    When oil and gas executives visited the White House in June, Biden snubbed them by refusing to attend the meeting. Instead, at the very same moment, he met with wind industry executives. A few days earlier, Biden administration officials signaled they may support a large new tax on the oil industry proposed by a Senator from Oregon.

    All of this has soured the oil and gas industry on investing in production.

    “If you were an oil company,” a senior executive at a major US bank told me, “why would you invest hundreds of millions of dollars into expanding refining capacity if you thought the federal government or investors would shut you down in the next few years? The narrative coming from the administration is absolutely insane.”

    And it’s about to get more insane. At the G-7 meeting in Germany earlier this week, French President Emmanuel Macron was overheard telling Biden that he couldn’t count on Saudi Arabia and the United Arab Emirates to produce much more oil. Implicit in Macron’s remarks was that the US needs to produce far more than Biden has been willing to allow.

    The problem is that Biden is in the grip of a pro-scarcity ideology that demands humankind return to relying 100 percent on renewables, like we did before the industrial revolution. But that’s a delusion…

    Keep reading with a 7-day free trial Subscribe to Michael Shellenberger to keep reading this post and get 7 days of free access to the full post archives.

    Tyler Durden
    Sun, 07/03/2022 – 17:10

  • Visualizing Interest Rate Hikes Vs Inflation Rate, By Country
    Visualizing Interest Rate Hikes Vs Inflation Rate, By Country

    Imagine today’s high inflation like a car speeding down a hill. In order to slow it down, you need to hit the brakes. In this case, the “brakes” are interest rate hikes intended to slow spending. However, as Visual Capitalist’s Jenna Ross explains, some central banks are hitting the brakes faster than others.

    This graphic uses data from central banks and government websites to show how policy interest rates and inflation rates have changed since the start of the year. It was inspired by a chart created by Macrobond.

    How Do Interest Rate Hikes Combat Inflation?

    To understand how interest rates influence inflation, we need to understand how inflation works. Inflation is the result of too much money chasing too few goods. Over the last several months, this has occurred amid a surge in demand and supply chain disruptions worsened by Russia’s invasion of Ukraine.

    In an effort to combat inflation, central banks will raise their policy rate. This is the rate they charge commercial banks for loans or pay commercial banks for deposits. Commercial banks pass on a portion of these higher rates to their customers, which reduces the purchasing power of businesses and consumers. For example, it becomes more expensive to borrow money for a house or car.

    Ultimately, interest rate hikes act to slow spending and encourage saving. This motivates companies to increase prices at a slower rate, or lower prices, to stimulate demand.

    Rising Interest Rates and Inflation

    With inflation rates hitting multi-decade highs in some countries, many central banks have announced interest rate hikes. Below, we show how the inflation rate and policy interest rate have changed for select countries and regions since January 2022. The jurisdictions are ordered from highest to lowest current inflation rate.

     

    The Euro area has 3 policy rates; the data above represents the main refinancing operations rate. Inflation data is as of May 2022 except for New Zealand and Australia, where the latest quarterly data is as of March 2022.

     

    The U.S. Federal Reserve has been the most aggressive with its interest rate hikes. It has raised its policy rate by 1.5% since January, with half of that increase occurring at the June 2022 meeting. Jerome Powell, the Federal Reserve chair, said the committee would like to “do a little more front-end loading” to bring policy rates to normal levels. The action comes as the U.S. faces its highest inflation rate in 40 years.

    On the other hand, the European Union is experiencing inflation of 8.1% but has not yet raised its policy rate. The European Central Bank has, however, provided clear forward guidance. It intends to raise rates by 0.25% in July, by a possibly larger increment in September, and with gradual but sustained increases thereafter. Clear forward guidance is intended to help people make spending and investment decisions, and avoid surprises that could disrupt markets.

    Pacing Interest Rate Hikes

    Raising interest rates is a fine balancing act. If central banks raise rates too quickly, it’s like slamming the brakes on that car speeding downhill: the economy could come to a standstill. This occurred in the U.S. in the 1980’s when the Federal Reserve, led by Chair Paul Volcker, raised the policy rate to 20%. The economy went into a recession, though the aggressive monetary policy did eventually tame double digit inflation.

    However, if rates are raised too slowly, inflation could gather enough momentum that it becomes difficult to stop. The longer high price increases linger, the more future inflation expectations build. This can result in people buying more in anticipation of prices rising further, perpetuating high demand.

    “There’s always a risk of going too far or not going far enough, and it’s going to be a very difficult judgment to make.”

    – JEROME POWELL, U.S. FEDERAL RESERVE CHAIR

    It’s worth noting that while central banks can influence demand through policy rates, this is only one side of the equation. Inflation is also being caused by supply chain issues, a problem that is more or less outside of the control of central banks.

    Tyler Durden
    Sun, 07/03/2022 – 16:35

  • Morgan Stanley: As The Recession Arrives, Will We See A Surge In Corporate Defaults
    Morgan Stanley: As The Recession Arrives, Will We See A Surge In Corporate Defaults

    By Vishwanath Tirupattur, global head of Quantitative Research at Morgan Stanley

    For some time, our economists have been highlighting that recession risks are rising globally. In their mid-year outlook, they lowered their 2022 global growth forecast sharply to 2.9%Y, less than half the 6.2%Y level a year ago. Since then, deceleration has continued. The combination of updated forecasts for a recession in the euro area, weaker incoming data, and revisions to 1Q GDP has led our US economists to shift down their 2022 US GDP forecast to 0.9% 4Q/4Q, and they have suggested that the risk of a US recession by the end of this year is high. A hallmark of the last three US recessions has been a spike in corporate credit default rates. We would argue that the credit default experience in a potential US recession may be more moderate this time around. However, despite the significant repricing in June, valuation adjustment is still incomplete.

    At the onset of the current hiking cycle, credit fundamentals were on a much healthier footing than in other cycles. Despite some deterioration at the margin in the last quarter, fundamentals remain reasonable and in line with pre-Covid levels – low net leverage, high interest coverage, and still-healthy cash on balance sheet. The ratings mix of the high yield bond market has improved. Currently, over half of the benchmark HY bond index is BB rated, versus 43% in 2018-19 and 40% in the aftermath of the GFC. Furthermore, refinancing needs are low. During 2022-24, only about 10% of the US$3 trillion in leveraged finance debt (high yield bonds and leveraged loans combined) is due to mature.

    We expect higher risk premiums in credit but do not anticipate a spike in corporate defaults over the next 12 months. Our credit strategists, led by Srikanth Sankaran, forecast HY default rates to track 2-2.5% on the Moody’s count-weighted measure through 2Q23 – double the current levels but well inside prior recession peaks. While this would be a notable departure from the experience of the last three recessions, it is not without precedent. In the 1970s and 1980s, we had recessions but without a spike in corporate default rates. No doubt stresses could increase over the medium term, but the more imminent concern is downgrades.

    Leveraged loans are the segment of the credit markets most vulnerable to higher rates, given their floating-rate nature. Over the course of past few years, we have seen the loan market drift towards the lower-quality segments (B3/B- ratings). Moody’s estimates that if rates were to increase by 300bp, absent meaningful earnings growth, as many as half of the B3 rated companies would see their interest coverage fall below 1.0x – a level more typical of a Caa rating than B3. Not surprisingly, the downgrade potential is much greater for companies that depend on leveraged loans (floating-rate liabilities) rather than the fixed-rate high yield bonds for funding. Thus we expect downgrades, particularly in the loan market, to be a bigger and more immediate concern for credit markets over the next 12 months rather than spiking defaults.

    Until about a month ago, we could argue that credit markets in general, and leveraged credit in particular, were underpricing recession risks. After the sell-off in June, US HY spreads are ~150bp wider, loan prices are down 2.5 points, CCC spreads have breached 1,000bp, and stressed tails have doubled. Clearly, growth risks are starting to be priced, but we think that the credit markets need to calibrate the risk of a recession more fully. For context, IG and HY spreads are at 155bp and 569bp, respectively, while garden-variety recessions/growth scares tend to see spreads go north of 200bp and 750bp, respectively. Thus, more repricing is needed since spreads are still shy of historical levels heading into a recession, especially in the lower-quality segments of the market. Unlike some previous credit cycles (such as the energy sector downturn in 2015-16), we don’t have a ‘problem sector’ per se. As such, identifying defensive sectors and flagging sectors to stay away from is more complicated this time around. Companies with a heavy reliance on low-end consumer demand, elevated wage intensity, and commodity/logistics input costs remain vulnerable in this regard.

    As the market recalibrates growth and liquidity risks, we expect decompression and dispersion themes to re-emerge. We would fade any rally in credit markets and recommend investors move up in quality/improve the liquidity profile of their portfolios.

    Enjoy your Sunday.

     

    Tyler Durden
    Sun, 07/03/2022 – 16:00

  • Home Price Cuts, Rising Inventories Are Ominous Signs Of Top
    Home Price Cuts, Rising Inventories Are Ominous Signs Of Top

    The pandemic housing boom hit a peak and should start rolling over as rising inventory forces some home sellers to slash prices. The weight of soaring mortgage rates and increasing inventory are the possible markings of a top that has already led some sellers in major US cities to cut listing prices. 

    “The housing market is absolutely in need of a reset,” George Ratiu, senior economist at Realtor.com, told Bloomberg. 

    Realtor.com’s data showed almost a third of listings in June had price cuts in Austin, Phoenix, and Las Vegas metro areas. Price cuts are a growing national trend as higher rates triggered an affordability crisis, removing millions of new prospective home buyers. 

    Bloomberg spoke with Naples, Florida, real estate agent Jennifer DeFrancesco who advised her clients to drop listing prices as she believes the flood of demand from the Northeast has eased. 

    Carolyn Young, a broker associate with Christie’s International Real Estate Sereno in the San Francisco Bay Area, said demand for homes in a 55-and-over community in Brentwood had seen dramatic declines since many retirees were battered by awful performance in their stock and bond portfolios in the first half. She advised clients at Trilogy at the Vineyards to lower their listings by $50,000 to $100,000 because of faltering demand. 

    “For sellers, it’s devastating, especially if they bought something else earlier and paid too much for that,” Young said.

    Price cutting comes as a flood of inventory enters a very tight market. Another Realtor.com report this week showed the number of active US listings soared 18.7% in June from a year earlier.

    Danielle Hale, the chief economist for Realtor.com, said, “We anticipated that more inventory will eventually cool the feverish pace of competition.” The rise in inventory was more profound in Austin, Texas; Phoenix, Arizona; and Raleigh, North Carolina, which saw active listings more than double from a year ago. In Nashville, Tennessee, active listings jumped 86%, and 72% in Riverside, California. 

    Mortgage applications and pending home sales are down, which suggests the jump in the 30-year fixed-loan mortgage rate from 3% to over 6% this year (back in March, we warned coming rate explosion would trigger a housing affordability crisis) is quickly cooling the market. Next, we should first see price declines in areas that were red hot during the early days of the pandemic.

    It’s only a matter of time before the Case-Shiller (newly minted S&P CoreLogic CS) home price index data turns. 

    Tyler Durden
    Sun, 07/03/2022 – 15:25

  • NY Governor To Require 3 Years Of Social Media History To Obtain Concealed Carry Permit
    NY Governor To Require 3 Years Of Social Media History To Obtain Concealed Carry Permit

    Within an hour of the US Supreme Court striking down a law which required New York residents to show “proper cause” to obtain a concealed carry license, Governor Kathy Hochul (D) promised legislation to counter the ruling.

    To that end, Hochul on Friday signed sweeping gun legislation into law that adds several layers of red tape for those who wish to obtain a gun in the state – including a new rule requiring anyone applying for a concealed carry permit to submit a three-year history of their current and inactive social media accounts. The new law will take effect on September 1, 2022.

    Applicants for concealed carry permits must also undergo 16 hours of firearm training, provide four character references, and list the contact information for domestic partners or adults who reside in the same house.

    More via the Post Millennial:

    Potential applicants will also be required to show “good moral character,” meaning “the essential character, temperament and judgment necessary to be entrusted with a weapon and to use it only in a manner that does not endanger oneself and others.”

    At a press conference regarding the new legislation, Hochul said “we are creating a definitive list of sensitive locations where individuals will not be able to carry firearms.“

    This list includes “schools, summer camps, libraries, daycares, parks and playgrounds, places children gather, theaters, museums, entertainment venues, places of worship for religious observation, polling places, educational institutions, and health medical facilities. Federal State Local government buildings, homeless and domestic violence shelters, places where alcohol is consumed, restaurants, bars, public transportation, subway buses, airports and at public demonstrations and rallies, and in Times Square.”

    Another new rule is a “Default of No Concealed Carry on Private Property and Businesses Unless Deemed Permissible by Property Owners.” Hochul said of this law, “We are making ‘no open carry’ the default position for private businesses. That means that any business, grocery store, retail, private home, place that wants to allow guns on their premises will have to demonstrate that and establish that they put a sign out there that says concealed carry guns are welcome here.”

    *  *  *

    One day after the June 23 ruling in New York State Rifle and Pistol Association v. Bruen, both Hochul and NYC Mayor Eric Adams vowed to enact legislation that would work around the USSC ruling.

    “Our state will continue to keep New Yorkers safe from harm even despite this setback from the Supreme Court,” Hochul said on Friday.

    In reaction, the state GOP said “the legislation not only violated the Second Amendment, but also privacy and free speech rights,” according to the Associated Press. The lawmakers were reportedly “incensed” and predicted that the new rules would be struck down.

    As Jonathan Turley further notes;

    One of the most questionable elements is the requirement that gun owners show “good moral character.” That obviously raises comparisons to the invalid Sullivan Act of 1911, giving local officials discretion over who can carry concealed guns based on a showing of “proper cause.”  The Court rejected the notion that citizens must prove their need to use an individual right as opposed to the government shouldering the countervailing burden:

    “We know of no other constitutional right that an individual may exercise only after demonstrating to government officers some special need. That is not how the First Amendment works when it comes to unpopular speech or the free exercise of religion. It is not how the Sixth Amendment works when it comes to a defendant’s right to confront the witnesses against him. And it is not how the Second Amendment works when it comes to public carry for self-defense.

    New York’s proper-cause requirement violates the Fourteenth Amendment in that it prevents law-abiding citizens with ordinary self-defense needs from exercising their right to keep and bear arms.”

    Under the New York law, applicants must undergo “enhanced screening” with in-person interviews and submit to reviews of their social media, including required access to social media. That provision seems ripe for challenge on a host of grounds, including the denial of free speech and associations rights.

    The law seems another overreach by the state. As I noted earlier, New York has thus far been about as effective in curtailing gun rights as Monty Python’s “Judean People’s Front Crack Suicide Squad” was effective in combating Roman occupation.

    After all, who needs Texas when gun rights advocates have New York?

    Tyler Durden
    Sun, 07/03/2022 – 14:50

  • Russia Asserts Full Control Over Luhansk Region With Fall Of Lysychansk
    Russia Asserts Full Control Over Luhansk Region With Fall Of Lysychansk

    Fresh of their victory over the key stronghold of Sievierodonetsk, Russian forces have claimed victory over its sister city of Lysychansk, which puts Russia in total control of the Luhansk province. Russian Defense Minister Sergei Shoigu affirmed as much in a Sunday statement, while the Ukrainian regional governor of Luhansk, Serhiy Haidai, said the “city is on fire”. 

    “Sergei Shoigu has informed the commander in chief of the Russian armed forces, Vladimir Putin, of the liberation of the People’s Republic of Luhansk [LPR],” the defense ministry said in a statement.

    Lysychansk, via Telegram

    Russia’s military and its separatist allies are now “full control of Lysychansk and other nearby towns, notably Belogorovka, Novodruzhesk, Maloryazantseve and Bila Hora,” the statement added.

    As for the aforementioned regional governor Haidai, he wrote on Telegram that “the Russians are reinforcing their positions in the Lysychansk region.”

    “The Russians are entrenched in the Lysychansk district, the city is on fire. The occupiers probably deployed all their forces at Lysychansk. They attacked the city with inexplicably brutal tactics,” Haidai said.

    As Luhansk and its breakaway pro-Russian republic is one of the two key regions that form Donbas, this puts Moscow a major step closer to achieving its stated goal of liberating all of the Donbas.

    A representative of the LPR militia, Andrei Marochko, said the city was being “cleared of Ukrainian nationalists” and said “victory flags have already been installed” near Lysychansk, as cited in CNN. Some reports have said that local pro-Russian citizens have erected a Soviet flag at a central city monument.

    According to a battlefield update issued by Ukrainian President Volodymyr Zelensky Saturday night:

    …the cities of the Luhansk region were “the epicenter” of the hostilities. In his nightly address on Saturday, Zelensky acknowledged that more than 2,600 Ukrainian cities and towns were under Russian control.

    “The Russian army continued to fire missiles at our cities,” Zelensky said, urging people to “help the army, help volunteers, help everyone who was left alone at this time” and to use their contacts to “spread the truth about the war and about the crimes of the occupiers on our land.”

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    An Al Jazeera war correspondent observed of Lysychansk’s capture by Russian forces, “That is strategically significant because that is where the Russians moved their military attention to after they failed to move into Kyiv in the early days of the war when they were beaten back from the capital.”

    Last week, in virtual speeches before the G7 and NATO summits, Ukrainian President Volodymyr Zelensky used the imminent fall of these eastern cities to highlight that his forces are in urgent need of more and heavier weaponry. He even suggested Putin could eventually go on to attack NATO “next year”.

    He said that before next year’s NATO annual summit, it could be that “several other states, possible members of the alliance, come under fire from Russia” and expressed hope he will attend the meeting in-person by then.

    Tyler Durden
    Sun, 07/03/2022 – 13:45

  • "Misdirection" Or "Misunderstanding" – Bezos Blasts Biden Blaming Gas Station Owners For High Prices
    “Misdirection” Or “Misunderstanding” – Bezos Blasts Biden Blaming Gas Station Owners For High Prices

    Authored by Rick Moran via PJMedia.com,

    Do we need to give prospective presidents an economic literacy test?

    There’s little doubt that, judging by this tweet, Joe Biden would get an “F.”

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    Wow. Jeff Bezos accused the U.S. president of either deliberately misleading the public or lacking a “basic” understanding of the forces that actually drive prices.

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

    Biden apparently doesn’t know that gas station owners are mostly independent small businesses whose razor-thin profit margins make it impossible to willy-nilly lower prices at the pump just because the president orders them to.

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    “You know as well as everyone that the Federal Reserve actually sets the prices—through rampant inflation,” wrote the Libertarian Party’s account.

    “When 40 percent of the dollars in the world was printed in one year, inflation sets in and prices skyrocket. Just yesterday you were blaming [Russia]. We see through your scam.”

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

    Added California gubernatorial candidate Michael Shellenberger,

    “At a time of war, Biden could have leveled with the American people and united the country through an ‘all-of-the-above’ clean energy strategy that included oil & gas. Instead, he has repeatedly lied about the causes of the energy crisis and divided the country.”

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    At least the Chinese agree with Biden.

    They mocked the American president for proving their point about “capitalist exploitation.” New York Post:

    In response to Biden’s demand that oil companies lower their prices, the president was trolled by Chinese state media.

    “Now US President finally realized that capitalism is all about exploitation. He didn’t believe this before,” wrote Chen Weihua, EU Bureau Chief and columnist for China Daily, an English language media outlet owned by the Chinese Communist Party.

    Biden’s unseemly begging comes on the heels of a White House advisor’s warning that we must suffer these high prices for fuel because “This is about the future of the liberal world order, and we have to stand firm.”

    Biden himself suggested Americans are just going to have to grit their teeth and get used to it. At a press conference in Madrid, he made it clear that the high prices would be with us as long as Ukraine could convince the United States to stand with them

    Q : The war [in Ukraine] has pushed [oil] prices up.  They could go as high as $200 a barrel, some analysts think.  How long is it fair to expect American drivers and drivers around the world to pay that premium for this war?

    THE PRESIDENT:  As long as it takes, so Russia cannot, in fact, defeat Ukraine and move beyond Ukraine.  This is a critical, critical position for the world.  Here we are.  Why do we have NATO?

    “So Russia cannot, in fact, defeat Ukraine and move beyond Ukraine,” is very cold war-ish, don’t you think? It was the rationale used by the right in every American intervention during the Cold War. The left mocked any notion of Russian expansionism at the time as childish and an excuse for imperialism.

    What say ye now, Joe Biden?

    Supplies wouldn’t be short and prices wouldn’t be as high if Biden had continued the policies of Donald Trump that made America virtually energy independent.

    Biden is going to Saudi Arabia later this month, hat in hand, to beg the Kingdom to open the spigot and pump more oil. What’s worse is that Biden refuses to take any responsibility for gas prices spiking. He has blamed everyone else for his failures. This latest idiocy demonstrates a shocking ignorance of basic economics and a childish political effort to evade blame.

    *  *  *

    Support PJ Media’s conservative reporting on Joe Biden’s radical, leftist, “America Last” agenda. Join PI Media VIP to support our conservative journalism and use the promo code AMERICAFIRST to get 25% off VIP membership!

    Tyler Durden
    Sun, 07/03/2022 – 13:40

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