- UK Home Prices Fall At Fastest Pace In Decade
UK Home Prices Fall At Fastest Pace In Decade
Tyler Durden
Thu, 06/04/2020 – 02:45Britain’s housing market has taken a serious hit during coronavirus lockdowns. Home prices tumbled the most in a decade in May as consumers were severely damaged by one of the worst recessions in centuries.
Bloomberg reports nationwide home prices fell 1.7% in May, the largest drop since February 2009. In annual terms, prices increased by 1.8% but down from 3.8% in April, as this suggests home prices will likely slump through year-end.
Britain’s government eased restrictions on lockdowns and has reopened some businesses as virus-related shutdowns resulted in the worst recession in 300 years. As for policy response, the Bank of England unleashed vast packages of financial support to cushion the economic blow.
Read: BoE Warns Of Worst Economic Slump In 300 Years
Despite the BoE’s rescue packages, manufacturing continued to contract in May, and consumers remained subdued. Retail sales during lockdowns fell at a record pace, along with consumer credit posted its first YoY drop since 2012.
In April, mortgage lenders approved the fewest home loans on record, with the number of approvals falling to 15,800, the BOE said.
“For now, an unprecedented combination of monetary stimulus, fiscal support, and repayment holidays should cushion and prevent a precipitous and sustained drop in house prices as activity resumes. That buffer will be tested over the coming months as fiscal stimulus is wound back and repayment holidays expire,” Bloomberg analyst Niraj Shah said.
Samuel Tombs, an economist with Pantheon Macroeconomics, said May’s decline in home prices would likely be the start of a slump that could persist through 2020.
“Spending and borrowing naturally will rebound in June, when all non-essential shops will reopen,” said Tombs. “But we doubt that households will spend the cash they have accumulated during the lockdown soon, given heightened job insecurity and lingering concerns about catching the virus.”
A distressed consumer, recession, and virus fears could have sparked the beginning chapters of a housing downturn in Britain.
- For Europe, Trade With China Trumps Freedom For Hong Kong
For Europe, Trade With China Trumps Freedom For Hong Kong
Tyler Durden
Thu, 06/04/2020 – 02:00Authored by Soeren Kern via The Gatestone Institute,
The European Union has issued a predictably weak and equivocal declaration on China’s growing interference in Hong Kong. European leaders, apparently fearful of retaliation by Beijing, have signaled that economic interests will take priority over the EU’s much-trumpeted founding values of human rights, democracy and the rule of law.
Europe’s continued appeasement of China indicates that the EU will be a weak link in efforts by Western democracies to confront the leadership in Beijing.
On May 29, the foreign ministers of EU member states met by video conference to discuss a common European response to China’s plans to impose a sweeping law that would ban all activities in Hong Kong that are deemed to endanger China’s national security.
Pro-democracy activists and lawmakers say the law, aimed at crushing political dissent, would effectively end the autonomy the city enjoys from Beijing under the “One Country, Two Systems” arrangement.
The unilateral move by China violates an international treaty — The Sino-British Joint Declaration on the Question of Hong Kong — an agreement signed in 1984 by which the United Kingdom, on July 1, 1997, transferred sovereignty of Hong Kong to China in exchange for a promise that the city would enjoy 50 years of limited autonomy under Chinese rule. Under the treaty, China is required to guarantee Hong Kong’s autonomy for another 27 years.
On May 28, the United Kingdom, the United States, Australia and Canada issued a joint statement that reprimanded China over its approach to Hong Kong:
“China’s decision to impose a new national security law on Hong Kong lies in direct conflict with its international obligations under the principles of the legally-binding, UN-registered Sino-British Joint Declaration. The proposed law would undermine the One Country, Two Systems framework. It also raises the prospect of prosecution in Hong Kong for political crimes and undermines existing commitments to protect the rights of Hong Kong people — including those set out in the International Covenant on Civil and Political Rights and the International Covenant on Economic, Social and Cultural Rights.”
The British government also announced that it was considering granting citizenship to the nearly three million residents of Hong Kong. The move infuriated China, which fears a massive brain drain from Hong Kong that would jeopardize the city’s role as a global financial and trading hub.
On May 29, U.S. President Donald J. Trump announced sanctions on China:
“China claims it is protecting national security. But the truth is that Hong Kong was secure and prosperous as a free society. Beijing’s decision reverses all of that. It extends the reach of China’s invasive state security apparatus into what was formerly a bastion of liberty.
“China’s latest incursion, along with other recent developments that degraded the territory’s freedoms, makes clear that Hong Kong is no longer sufficiently autonomous to warrant the special treatment that we have afforded the territory since the handover.
“China has replaced its promised formula of ‘one country, two systems’ with ‘one country, one system.’ Therefore, I am directing my administration to begin the process of eliminating policy exemptions that give Hong Kong different and special treatment.
“My announcement today will affect the full range of agreements we have with Hong Kong, from our extradition treaty to our export controls on dual-use technologies and more, with few exceptions.
“We will be revising the State Department’s travel advisory for Hong Kong to reflect the increased danger of surveillance and punishment by the Chinese state security apparatus.
“We will take action to revoke Hong Kong’s preferential treatment as a separate customs and travel territory from the rest of China.
“The United States will also take necessary steps to sanction PRC and Hong Kong officials directly or indirectly involved in eroding Hong Kong’s autonomy and — just if you take a look, smothering — absolutely smothering Hong Kong’s freedom. Our actions will be strong. Our actions will be meaningful.”
Trump also announced restrictions on Chinese nationals coming to study at American universities, and measures to prevent China from stealing technology and intellectual property.
Under U.S. law, Hong Kong enjoys special trade privileges. In November 2019, however, the U.S. Congress overwhelmingly passed the Hong Kong Human Rights and Democracy Act of 2019, which places new conditions on this status. The U.S. Secretary of State is now required to certify, annually, that Hong Kong maintains autonomy from mainland China. If this cannot be certified, the U.S. Congress can revoke Hong Kong’s special trade status. This could jeopardize massive amounts of trade between Hong Kong and the United States and dissuade international investments there in the future.
On May 27, U.S. Secretary of State Mike Pompeo announced that “no reasonable person can assert today that Hong Kong maintains a high degree of autonomy from China, given facts on the ground.” He added:
“After careful study of developments over the reporting period, I certified to Congress today that Hong Kong does not continue to warrant treatment under United States laws in the same manner as U.S. laws were applied to Hong Kong before July 1997.”
In stark contrast to the measures announced by the United States and the United Kingdom, EU foreign ministers, under heavy pressure from Germany, have decided not to take any action against China. In a statement issued after the May 29 video conference of EU foreign ministers, the EU expressed “grave concern” about China’s actions in Hong Kong but added that “EU relations with China are based on mutual respect and trust.”
EU Foreign Affairs Commissioner Josep Borrell added that the bloc has no plans for sanctions on either Beijing or Hong Kong:
“We will continue discussing and we will continue to reach out to Beijing. Our reaction has to be commensurate with the steps that have already been taken. We will continue trying to put pressure on the Chinese authorities in order to make them aware that this issue will affect the way we deal with some of the issues of mutual interest. But there is nothing more on the agenda.”
When asked why the EU refused to sign the UK-US joint statement, Borrell replied: “We have our own statements. We do not need to join other people’s statements.”
German Foreign Minister Heiko Maas said that the best way to influence China on the Hong Kong dispute was for the EU to maintain “dialogue” with Beijing:
“I think the past has shown that it is, above all, important to have a dialogue with China in which the EU very cohesively brings both its issues and principles to the fore, and then we will see where this dialogue leads.”
Germany, which takes over the six-month rotating EU presidency on July 1, has announced that it will prioritize relations with China. German Chancellor Angela Merkel is particularly determined to proceed with a major EU-China summit to be held in the German city of Leipzig in September. She is reportedly under intense pressure from German automobile manufacturers, who are concerned about maintaining their access to the Chinese market.
The continued cowardice of European leaders is a reflection not only of Europe’s geopolitical weakness and economic overdependence on China, but also of a moral vacuum in which they refuse to stand up for Western values.
In April, European officials caved in to pressure from China and watered down an EU report on Chinese efforts to deflect blame for the coronavirus pandemic. A few weeks later, the EU Ambassador to China, Nicolas Chapuis, allowed the Chinese government to edit an op-ed article signed by him and the 27 Ambassadors of EU member states, to mark the 45th anniversary of diplomatic relations with China.
The EU authorized the Chinese Ministry of Foreign Affairs to remove references to the origins and the spread of the coronavirus from the article, published in China Daily, an English-language daily newspaper owned by the Communist Party of China.
An EU spokesperson said that the EU allowed China to revise the op-ed because Brussels “considered it important to communicate EU policy priorities, notably on climate change and sustainability…” Borrell later pledged that the EU will never again give in to Chinese censorship.
The head of the Bundestag foreign affairs committee, Norbert Röttgen, tweeted that Europe’s credibility is on the line over its response to China:
“China aims to repress freedom, democracy & the rule of law in #HongKong. #Europe has to condemn such acts of wrongdoing & stand up for the freedoms of Hong Kong’s citizens. It would be disastrous & a huge blow for Europe’s credibility, if #China could rely on us keeping silent.”
Noah Barkin, a senior fellow at the German Marshall Fund of the United States in Berlin, said that the EU should better use the leverage that it has over China:
“Europe can and should respond more forcefully than it has so far. German Greens co-leader Annalena Baerbock has suggested that the EU—and German Chancellor Angela Merkel, the host—cancel its looming summit with Chinese President Xi Jinping in Leipzig in September 2020 unless Beijing withdraws its national security legislation.
“That would send a strong signal that it will not be business as usual as long as China is violating the spirit of ‘one country, two systems’ in Hong Kong.
“Another step, which is reportedly being considered by British Prime Minister Boris Johnson, is to grant Hong Kong residents asylum in Europe. Germany welcomed two Hong Kong pro-democracy activists in 2019, so such a step would not be unprecedented.
“In an environment where the Chinese Communist Party (CCP) faces global outcry over its handling of the new coronavirus, is under acute political and economic pressure from Washington, and needs foreign investors to help revive its suddenly sputtering economy, the EU has more leverage with Beijing than it has had in quite a while. Using it would help counter the narrative—following two embarrassing recent incidents of self-censorship in the face of pressure from Beijing—that Europe is impotent and weak when it comes to China.”
Theresa Fallon, Director of the Brussels-based Center for Russia Europe Asia Studies, added:
“The uncomfortable truth is that business elites, European bureaucrats, and many European politicians are out of touch with the public’s sentiment on Hong Kong.
“The EU’s anemic statement on Hong Kong is not going to keep anyone at Zhongnanhai, the seat of China’s leadership, awake at night. EU High Representative Josep Borrell didn’t even bother to tweet it. Beijing has taken Brussels’s measure and does not fear their statements, which declare that they ‘will continue to follow developments closely.’
“There has been a concerning culture of complacency and self-censorship in EU diplomacy with the People’s Republic of China which has left the EU neutralized since 2016. If we turn to EU member states, the story is not much better. Merkel embraced trade with China in the hope that it would change China. But the reality is that contact with Beijing has eroded European values.
“Beijing understands that economic issues are paramount. Few European leaders pretend to even care about basic human rights in Hong Kong, and it will be difficult to get unanimity on this issue across Europe due to Beijing’s economic statecraft.
“To paraphrase Edmund Burke, all that is needed for Hong Kong’s ‘one country, two systems’ principle to perish is for good people to do nothing.”
Andreas Fulda, a senior fellow at the University of Nottingham’s Asia Research Institute, launched a petition calling for an end to Germany’s appeasement of China. The petition, titled, “Europe can no longer afford Germany’s failed China policy of ‘change through trade,'” states:
“We need to talk about Germany. Let’s start with an inconvenient truth: German governments, both past and present, have consistently prioritized trade with China over other enlightened German national interests, for example democracy and human rights. Such a commercially-driven China engagement, however, is not a value-free proposition.
“Whether it is the incarceration of 1.5 million Uyghurs and Kazakhs in mainland Chinese internment and labor camps, the suppression of Hong Kong’s democracy movement, or the cover-up of Covid-19: German Chancellor Merkel does not seem to fully appreciate how continued Communist Party rule endangers peace, security and public health, not just in China, but around the world.
“On Monday, May 25, 2020, Europe’s top diplomat Josep Borrell addressed a gathering of German Ambassadors. He told them that the European Union and its member states need to develop a ‘more robust strategy’ toward China. It is self-evident that the EU will struggle to develop a more assertive European China policy without the backing of Germany.
“But how can German diplomats change tack if Chancellor Merkel is unwilling to give directions? It is understandable that a nation which is guilty of the horrors of the Holocaust is wary of playing an assertive global leadership role. But there is also a real danger of an ‘oblivion of power,’ where Germany in fact underutilizes existing leverage in global affairs.
“Germany is often praised for facing up to its Nazi past. Never again has long been a guiding principle of an ethical German foreign policy. But how then can the German government remain silent when Uyghurs and Kazakhs are incarcerated, Hong Kongers have their civil and political liberties stripped away and Taiwanese are threatened with military annexation?
“China under General Secretary Xi Jinping is regressing on all fronts: human rights violations are now systemic and endemic, even criticism by Chinese academics are no longer tolerated, and the Chinese Communist Party is increasingly aping Russian disinformation strategies in Europe. Germany must now ask if it will continue to actively support such a regime.
“So far Chancellor Merkel has failed to answer this question. She has been unable to articulate what enlightened German ideational and material national interests look like beyond trade and investment. This is a serious shortcoming which not only undermines German foreign policy towards China but also makes it harder to develop a new European strategy towards China.
“At a time of heightened geopolitical tensions between the United States and Communist Party-led China, Europe can no longer afford Germany’s unprincipled and failed China policy of ‘change through trade.’ In 2020 it is abundantly clear that China didn’t liberalize and democratize as a result of German car manufacturers enriching themselves by selling cars to China.
“We need a Europe-wide approach which repositions the EU in light of Xi’s increasing totalitarianism. While trade clearly matters, European values need to be defended, too. I ask you to sign this petition to put pressure on the German government. Chancellor Merkel should abandon her failed China policy and join Europe’s search for a more principled approach towards China.”
Mathias Döpfner, CEO of Axel Springer, Europe’s largest publishing company, recently argued that the time has come for Europe to reevaluate its relationship with China:
“Economic relations with China might seem harmless to many Europeans today, but they could soon lead to political dependence and ultimately to the end of a free and liberal Europe. The European Union has the choice. But above all Germany, Europe’s economic motor, has the choice.
“Should we make a pact with an authoritarian regime or should we work to strengthen a community of free, constitutionally governed market economies with liberal societies? It is remarkable that German politics, with its love of moralizing, seems to throw its values out the window when dealing with China. What is at stake here is nothing less than what kind of society we want to live in and our concept of humanity….
“If current European and, above all, German policy on China continues, this will lead to a gradual decoupling from America and a step-by-step infiltration and subjugation by China. Economic dependence will only be the first step. Political influence will follow.
“In the end, it is quite simple. What kind of future do we want for Europe? An alliance with an imperfect democracy or with a perfect dictatorship? It should be an easy decision for us to make. It is about more than just money. It is about our freedom, about Article 1 of Germany’s Basic Law, the greatest legal term that ever existed: human dignity.”
- Civil Unrest Was Inevitable – Here's How It Will Be Exploited To Bring In Tyranny
Civil Unrest Was Inevitable – Here’s How It Will Be Exploited To Bring In Tyranny
Tyler Durden
Wed, 06/03/2020 – 23:40Authored by Brandon Smith via Alt-Market.com,
Mass civil unrest is a cumbersome weapon for societal change; like an oversized caveman club made of oak. You can barely swing it, and when you do you might destroy an enemy with it but you could also unwittingly destroy innocent people at the same time. Once the weapon is in motion adjusting its direction or momentum becomes difficult.
I prefer the scalpel approach – Find the cancer and cut it out directly, rather than bashing at the whole body just to get at one tumor.
Another problem with protests and riots is that they often have no discernible goals, or they lose track of their goals almost immediately. When the initial protests started, they targeted the police precinct in Minneapolis which was home to the officers that killed George Floyd. In my view this was perfectly acceptable. At this stage a majority of Americans were on their side. Many conservatives and law enforcement officers even came out in support of these measures and admonished the actions that violated common police procedure and led to unnecessary death.
But now, the situation has turned into something far beyond the killing of George Floyd. It has become a vehicle for agendas and not surprisingly the establishment benefits most; the very establishment the protesters think they are fighting against.
The riots have been co-opted. Where whites and blacks, conservatives and liberals alike were mostly in agreement, now there are attempts at racial division. Why is the death of Floyd being presented as a race issue in the first place? Why is it not being presented as a psychopath issue? There are psychopaths in every race in equal numbers, and this should be people’s focus. In other words, psychopaths must be removed from society, whether they be police, politicians, business leaders, “caretakers”, etc. How about some examples…
In Mesa, Arizona in 2017, a white man named Daniel Shaver was murdered by officer Phillip Brailsford after an anonymous tip told police he had a rifle in his hotel room. Though it is not illegal to own a rifle in Arizona and certainly not illegal to bring one into a hotel, a team of officers was sent armed with AR-15s to approach and arrest Shaver. Brailsford ordered the frightened Shaver to crawl across the floor instead of asking him to lay on the ground with his hands and feet spread as is normal police procedure. The man, sobbing in terror, reached to pull up his shorts which were falling off, and was riddled with bullets by Brailsford.
Watching the video, it is clear that Brailsford created a situation in which Shaver could easily “make a mistake” and thereby create an excuse for the officer to kill him in cold blood. As it turned out, the rifle Shaver had in his room was a BB gun. A jury later acquitted Brailsford of any wrongdoing on the grounds that they could not determine “his thoughts and feelings” at the time of the shooting. This sounds strange to me and I don’t think most people on trial for murder get anywhere near the same latitude with so much evidence on hand.
On the same day in North Carolina an officer was sentenced to 20 years in prison for the murder of an unarmed motorist. The difference? The motorist in South Carolina was black.
The point is, psychopathic cops kill people regardless of their skin color. White people are at risk as much as black people. But at least when a black person is wrongly killed, the public and the media might take serious notice. There were no nationwide protests or riots for Daniel Shaver. The establishment works in favor of psychopaths, not white people. In fact, Phillip Brailsford was fired and then REHIRED for a short time by the Mesa Police so that he could still apply for his pension.
What about psychopaths that aren’t white cops? Oh, there are plenty of them, too. How about Mohamed Noor, a BLACK Minneapolis police officer that killed an unarmed white woman, Justine Ruszczyk, in 2017 while responding to her 911 call? Leftist activists including those at the NAACP at the time claimed that Noor was being “unfairly targeted” because he was black. There were no protests or riots for Justine Ruszczyk. Though, luckily, Mohamed Noor did go to jail for his crime.
And if we are going to continue following the thread of violence and psychopathy vs. race, I can’t leave out the black nurse in Detroit that filmed himself torturing elderly patients by beating them repeatedly in their beds, completely unable to defend themselves. The man has been arrested, but again, no riots yet over this horror show.
There are evil people of every race and ethnicity in this world that do terrible things, however, the worst people are those that exploit the tensions that these evil people create in order to turn crisis into opportunity. The reason there are riots happening globally now in the wake of the death of George Floyd is because people are angry, but also, people are malleable and easy to manipulate when they are angry.
The country has just partially “reopened” from the pandemic lockdowns, and more lockdowns are likely before the year is out. Over 40 million people lost their jobs during the economic shutdown and the government checks are not going to sustain the public much longer. Only 13% to 18% of small businesses that requested aid actually received money from the small business bailout, and most of those that did not get money are facing closure. Government restrictions have been accelerating, and people are already on edge. Riots are now an inevitable part of daily life in America.
But with events like the death of George Floyd, the riots can be manipulated.
The rage of the masses can be directed on false issues of race and shallow left/right politics instead of being directed at corrupt government and the elites that created the economic mess we now see before us. The protests over George Floyd started out by raising questions on abuse of power by police, a legitimate cause. Now they have been poisoned by race politics and outsiders seeking to create useful chaos.
Provocateurs have infiltrated the protests and are attempting to trigger indiscriminate violence. Pre-staged weapons such as piles of bricks, bottles and other items have been appearing magically in protest zones. Property is being destroyed by people not connected to the main protest groups. Odd occurrences are popping up everywhere.
Here is where this is all headed…
As I predicted in 2016 just after the election of Donald Trump, it appears the goal of the establishment is to produce extreme division among the American public and then exploit the hard-left as a weapon to frighten conservatives into supporting martial law. In my article ‘Order Out Of Chaos: Defeat Of The Left Comes With A Cost’, I stated:
“With Trump and conservatives taking near-total power after the Left had assumed they would never lose again, their reaction has been to transform. They are stepping away from the normal activities and mindset of cultural Marxism and evolving into full blown communists. Instead of admitting that their ideology is a failure in every respect, they are doubling down.
When this evolution is complete, the Left WILL resort to direct violent action on a larger scale, and they will do so with a clear conscience because, in their minds, they are fighting fascism. Ironically, it will be this behavior by leftists that may actually push conservatives towards a fascist model. Conservatives might decide to fight crazy with more crazy.”
Donald Trump has consistently discussed the use of the National Guard in response to the pandemic and the protests. And now, he is apparently considering using the Insurrection Act to deploy heavily armed military forces to US soil.
Is it just a coincidence that conservatives were the most opposed to medical martial law only a week ago in the face of the pandemic, and now they are considering the merits of martial law in the face of the leftist influenced riots? And who actually benefits from this? Perhaps the elitist establishment that’s been calling for martial law measures from the very beginning?
I have been hearing the narrative everywhere in liberty movement circles that “civil war is here” and “we have to support Trump and martial law to stop it”. Firstly, I have been warning for years that Trump is controlled opposition. His cabinet is overflowing with the same banking elites and globalists that the liberty movement stands against. Giving Trump martial law powers is no different than giving the elites around him martial law powers. If you support martial law and overarching government, then you are NOT a conservative you are a statist, and statists must be opposed by all who value freedom.
These people also don’t understand what “civil war” actually is. Groups of people protesting is not a war. What I see primarily is a bunch of ignorant children posing for Instagram photos and pretending they are activists. And if as the evidence suggests there is a provocateur element infiltrating these protests to stir up violence, then isn’t it possible that their goal is to get us to back martial law policies?
If the infiltrators are extremist communist organizations like Antifa or Black Lives Matter that receive funding from elites like George Soros and his Open Society Foundation, then we should consider the possibility that the intention is not just to influence the protests, but to also influence conservatives to react by supporting violent government power. If they can trick conservatives into suddenly supporting the lockdowns, curfews, and a national guard/military presence to stop the protests, then they will have defeated us without firing a shot. We will have defeated ourselves and our own constitutional principles.
The bottom line? More government power is NEVER the solution to any problem. Totalitarianism is never the answer. There will now be endless excuses to declare martial law. When the George Floyd riots fizzle out, there will be some other trigger event. In fact, these riots are probably just a precursor to the riots that will rage when the public realizes the US economy is not coming back from the pandemic, and that more lockdowns are coming. I would not be surprised if the Floyd riots are even blamed for a resurgence of Covid infections, which would give the government a rationale for more lockdowns. Beware anyone that uses martial law as the go to answer to these crisis events.
The solution in this case is to prosecute the police involved in the murder of George Floyd to the fullest extent of the law, point out that this is a problem of abuse of power and psychopathy, not a problem of race, and to stop outside interests from busing in provocateurs to trigger riots.
This is being done in some cases by the protestors themselves, who are exposing provocateurs within their ranks and filming them in the act.
The next best step is for businesses to secure and defend their own properties. We have seen it time and time again; the buildings that have armed personnel on hand to guard them do not get torched. Of course, right now a number of companies that have property damage due to rioters and looters are actually SUPPORTING the rioters and looters! Corporations are falling all over themselves to praise the protests and even the riots based on race politics. They are also pouring millions in cash into “social justice” groups. We’re supposed to declare martial law and bring in the military to defend the property of companies that are vocal in their solidarity with the looters? What kind of idiocy is that? Just let them be looted if they are going to double-down on this hard-left madness.
If this current trend continues it would not surprise me at all if George Floyd becomes a forgotten footnote in the riots that were started in his name. If certain elites get their way, Americans will continue to riot without even knowing why, and those riots will never be aimed at the people that actually deserve it. In the meantime, the establishment wants at least one side of the political spectrum, at least one half of the population, to support totalitarian measures, and they are clearly targeting conservatives with fear tactics in order to get us on board.
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- Nuclear Brinkmanship Is Back: Putin OKs Using Nukes In Response To Conventional Attacks
Nuclear Brinkmanship Is Back: Putin OKs Using Nukes In Response To Conventional Attacks
Tyler Durden
Wed, 06/03/2020 – 23:20For over the past year it seems every month has witnessed Washington and Moscow upping the ante on nuclear weapons rhetoric, which has been accompanied by the breakdown of key treaties, including recently the landmark Intermediate-Range Nuclear Forces Treaty (INF) and more lately ‘Open Skies’ — now with even New START on the chopping block.
Russia has vowed that for each time Washington moved the goal posts in terms of backing off of prior policies of nuclear weapons restraint, it would respond in kind. This also as the Trump administration has gone so far as to reportedly seriously consider restarting nuclear tests, which hasn’t been done in three decades.
Putin appears to now be making good on ‘reciprocal’ threats, on Tuesday signing into effect a new nuclear policy allowing Russia to use nukes in response to conventional arms attacks.
It’s essentially a clear rejection of a “no first use” policy which escalated nuclear tensions to frightening levels during the Cold War, which a number of world powers have since long fought to implement globally.
But now the Kremlin policy will mirror the United States official nuclear doctrine, which even includes allowance of deploying a nuke if “reliable information” of a direct threat of ballistic missile attack is confirmed.
As the AP underscored, it sends a direct message and warning to the United States:
In line with Russian military doctrine, the new document reaffirms that the country could use nuclear weapons in response to a nuclear attack or an aggression involving conventional weapons that “threatens the very existence of the state.”
But the policy document now also offers a detailed description of situations that could trigger the use of nuclear weapons. They include the use of nuclear weapons or other weapons of mass destruction against Russia or its allies and an enemy attack with conventional weapons that threatens the country’s existence.
The shift in deterrent policy also appears to preempt the US placing missiles in Europe, a serious fear after the breakdown of the INF.
Needless to say US-Russia relations at their lowest point in post-Cold War modern history, now dangerously close to a nuclear brinkmanship scenario which once witnessed Americans having to huddle into bomb shelters on fears of ‘imminent’ apocalyptic nuclear destruction.
Perhaps at some point soon we’ll witness a return to the 20th century phenomenon of rapidly construction bomb and fallout shelters across the nation?
Vladimir Putin endorses nuclear doctrine allowing for first strikehttps://t.co/Nz4zNTKMQ1
— EndGameWW3 (@EndGameWW3) June 2, 2020
https://platform.twitter.com/widgets.js
And as a reminder amid this extremely dangerous escalation with apparently “no off ramp” – we were assured for years by Russiagate advocates that Trump is some kind of Russian puppet in the White House, yet at every step he’s in reality worsened relations with Moscow.
- Trump's Distractions Or Is The Empire In Retreat?
Trump’s Distractions Or Is The Empire In Retreat?
Tyler Durden
Wed, 06/03/2020 – 23:00Authored by Tom Luongo via Gold, Goats, ‘n Guns blog,
Things continue to spiral out of control in the U.S. as the myth of policing fails and anti-civilizational forces move into the power vacuum.
And while I’m still completely committed to the end of the U.S. empire and its imperial edicts, It’s also not lost on me what’s happening, who’s making it happen and how they are taking advantage of this.
I warned you President Trump’s near atavistic pursuit of U.S. ‘enemies’ in places like Syria, Iraq, Iran and Venezuela would turn the world against us. Look at the protests for George Floyd across Europe and tell me things haven’t changed.
The empire is the problem. It’s a lesson Justin Raimondo taught me at Antiwar.com twenty years ago. And it’s only now that that idea has reached any kind of critical mass.
Are we going to dismantle the empire in an orderly fashion or a chaotic one? The animals on the streets have cast their vote. What’s yours?
And while Trump has made a hash of foreign policy in so many ways, I also told you that he was smart enough to only play the crazy Ivan role up the to point of actually starting a shooting war.
This is his greatest accomplishment as President. Sadly, it shouldn’t be that great an accomplishment.
And all detractors need to remember this, including me. He hasn’t ended existing wars, but he hasn’t started any new ones. And the U.S. political apparatchiks in D.C. have been braying for wars for nearly four years.
Trump’s failure, however, is in not understanding that sanctions, tariffs, and diplomatic strong-arming are acts of war.
They may be a real part of realpolitik but his failure to grasp the nuances of that have led to the present situation internationally where he is effectively being ignored in every way that matters.
At the same time he’s dealing with a domestic insurrection that is both organic and organized, free-spirited and feral.
Here are a list of major incidents over the past week that support the thesis of the failure of the U.S. empire.
They are all significant.
The first is Iran successfully staring down U.S naval blockade threats to deliver refined petroleum and replacement parts to Venezuela. All five tankers made it safely into port and expect another five in the future.
Like with last year’s drone incident and this January’s missile attack on our bases, Iran called Trump’s bluff when push came to shove. As Yra Harris said to me in my recent podcast, do you think the U.S. will go to nuclear war over Turkey? No.
We didn’t do it in 1972 over Taiwan when Nixon sat down with Mao. We’re not doing it today with Iran, China or Russia. Iran understands this. Russia understands this. And China understands this.
So, all Trump has as an effective weapon is excising people from the dollar system, itself the source of most of the U.S.’s real strength, because the military truly can’t be used anymore like it was in the past.
And that weapon is being easily countered.
That is only accelerating the resistance to the U.S.’s hegemony in the long run.
Next up is the completion of Nordstream 2. It’s happening. Yes, Trump and his idiotic sanctions delayed it for a year or so, but that delay forced Ukraine’s hand to sign a terrible gas transit deal with Gazprom which will ensure in five years there will be no gas transiting across Ukraine.
So, does that change the dynamic in Ukraine? Ukraine was the project of Obama, Clinton, Biden, McCain and Nuland. Why on earth would he continue it today?
End the sanctions. End support of Ukraine. The Democrats will scream Russia into a vacuum.
The Russian pipe-laying vessel is in Danish waters doing the work and all Trump accomplished is ticking off the Swiss. None of the legal arm-twisting worked.
More sanctions won’t stop it.
The pipeline will be finished by the end of the year.
The EU gas directive which forces un-bundling of the ownership of the pipeline from the gas going through it was nullified by German courts.
Was anyone surprised by this? Germany gets to become the energy distribution hub for Europe, tying them to Russia. Why would they vote against that?
All the time, money and political capital spent to stop Nordstream 2 which was never going to be stopped because of the economic and political advantages to Germany, have come to naught.
Pipelines are important. They are the seams that bind countries together. Trump knows this but he can’t stop it.
Putin and Russia now have major energy pipelines connecting them to two major NATO countries, Turkey and Germany. All because the Obama administration decided to stop South Stream going through Bulgaria.
So instead of Russia gaining the long-term relationship with and loyalty of Bulgaria, it has gained even stronger relationships with Turkey and Germany. If this isn’t a foreign policy own goal of epic proportions nothing is.
And that’s on Obama, not Trump.
This solidifies Russia’s hold over the Black Sea and gives Russia the ability to support kicking the U.S. influence out of the Eastern Mediterranean. It also ensures that Turkey’s adventurism in the Mediterranean is tempered by Putin, not Erdogan in the end.
When Turkey gets uppity to the point of needing a smack down, Trump won’t hold the hammer, Putin will. And Trump will need Putin to deliver that blow to protect Greece and/or Israel and what happens then?
Still think the Empire needs to be kicked in the nuts by attacking it from within? It’s doing a fine job of self-flagellation from my seat in the bleachers.
The war in Syria is, effectively, over. So is Iraq. Trump understands this dynamic but won’t admit it publicly. In reality, he knows there is little left to do except pull out of the region now. Hence he’s quietly, for him, drawing down troops in Afghanistan at a far faster rate than has been officially recognized.
The Pentagon says that the goal has been for 8,600 troops to be left in the country by mid-July, and they are so ahead of schedule they say they’ll meet that number in June, which is just a few days away. The White House, by contrast, suggested that the US has somewhere in the realm of 7,000 troops left in Afghanistan and that this is set to drop even further.
Afghanistan first. Then Iraq. Then Syria. If reports of Bibi Netanyahu’s pet traitor Jared Kushner’s days in the White House being numbered are true, that timetable could accelerate quickly in the next couple of months as we approach the election.
The big issue surrounding the domestic insurrection today is the ruthlessness of the Empire abroad and at home.
Trump has a chance here to ‘win bigly’ as Scott Adams puts it, by reversing his worst foreign policy excesses, lifting some of the sanctions on places like Iran and Venezuela and reining in the lawlessness of both the jackals in D.C. and on the streets across the U.S.
But he can’t do that if people pile on the side of the vandals fomenting insurrection to cover up their crimes.
* * *
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- ECB Preview: Another Massive QE Expansion Coming
ECB Preview: Another Massive QE Expansion Coming
Tyler Durden
Wed, 06/03/2020 – 22:40As the Eurozone continues to battle with the fallout from the COVID-19 crisis, market participants continue to expect the ECB to unveil further support measures on top of the wave of stimulus announced since March.
As NewsSquawk writes in its ECB preview, with rates set to be left on hold, focus will be placed on any expansion to the Bank’s Pandemic Emergency Purchase Programme (PEPP) whose purchases the ECB revealed for the first time this week. The PEPP currently has a total size of EUR 750bln, however, consensus expects this to be increased at some point. Most analysts expect a EUR 500bln increase this week as part of a pro-active strategy. Others suggest that it could be more prudent for the ECB to hold fire for now, although with an expansion largely priced in any lack of action by the central bank will likely have an adverse market impact. Other potential policy measures include extending the duration of PEPP into next year, purchases of “fallen angels” bonds and expanding the current tiering exemption multiplier of 6x.
PRIOR MEETING: The latest policy announcement from the ECB saw policymakers opt to stand pat on rates once again. Instead, the Governing Council decided to sweeten the terms of the existing TLTROIII operations and launch a new series of non-targeted pandemic emergency longer-term refinancing operations (PELTROs). Those hoping for an expansion of the pandemic emergency purchase programme (PEPP) were left somewhat disappointed with the current envelope left at a size of EUR 750bln, whilst the asset purchase programme (APP) will continue to run at a monthly pace of EUR 20bln. That said, the Governing Council was explicit in informing market participants that it “is fully prepared to increase the size of the PEPP and adjust its composition, by as much as necessary and for as long as needed”. At the accompanying press conference, Lagarde provided a relatively cautious introductory statement, as expected, whilst stopping short of specific forecasts on the macro outlook. Heading into the announcement some desks had speculated about the possibility of yield curve control (YCC), on which, Lagarde stated, the combination of tools the ECB is currently using enables it to operate across the entire curve; but noted the ECB will use all the flexibility that it has.
FISCAL EFFORTS: A key theme of the Lagarde Presidency has been calling for greater support from fiscal authorities. Last week saw news that the European Commission is to mobilize EUR 750bln for the European Recovery Fund, comprising EUR 500bln in grants and EUR 250bln in loans, and the European Commission is to propose an EU budget worth 1.1tln along with the Recovery Fund. Judgement from the ECB at this stage will likely be reserved given that the proposal is yet to be signed off by EU leaders, with leaders from the “Frugal Four” (Netherlands, Austria, Sweden, Denmark) set to seek negotiations on key aspects of the plan, particularly the grants/loans component. That said, President Lagarde will likely take note of the proposal and thank the Commission for its efforts, noting that such a fiscal initiative is required in order to kickstart the EU recovery.
RECENT DATA: The May CPI release saw Y/Y CPI fall to 0.1% from 0.3% which marked the smallest increase in price growth since June 2016. The headline was largely suppressed by declines in energy prices with core and super-core readings showing more resilience, residing at 1.1% and 0.9% respectively. Elsewhere, given the fluidity of the current situation, timelier “soft” indicators have been of greater focus for the market. May’s Flash EZ Composite reading rose to 30.5 from 13.6 (Exp. 25.0), which, although was an increase from the prior, remained firmly in contractionary territory and prompted Markit to forecast a Q2 GDP contraction of around 10% vs. Q1. Other sentiment indicators have seen EZ Consumer Confidence at -18.8 in May with Economic Sentiment at -67.5 and services falling to -43.6 despite the easing of some lockdown measures across the bloc.
RECENT COMMUNICATIONS: Notable interjections from the central bank have included recent comments from President Lagarde who cautioned that the Bank’s ‘mild’ growth scenario that looked for a 5% contraction in GDP this year has become outdated. Lagarde added that growth is likely in the range of the medium and severe scenarios which look for an 8% and 12% contraction respectively. Earlier in May, the President stated that the Bank will play its full part within its mandate and emphasized that there should be no undue constraints on ECB policy. Last week, Bank of France Governor Villeroy was explicit in his support for further easing, suggesting that the ECB has room to act “rapidly and powerfully”, adding that the Bank can be even more open regarding the flexibility of its PEPP. Elsewhere, Germany’s Schnabel left the door open to further easing by stating that ““If we judge that further stimulus is needed, the ECB will be ready to expand any of its tools in order to achieve its price stability objective”.
GERMAN CONSTITUTIONAL COURT RULING: On May 5th, the German Constitutional Court found that the ECB’s Public Sector Purchase Programme (PSPP) did not violate the prohibition on monetary financing but did rule that the programme did not respect the “principle of proportionality”, suggesting it went too far with its mandate – thus violating German law. As such, the court issued a three-month ultimatum to the ECB to demonstrate proportionality or the Bundesbank “may no longer participate in the implementation and execution of the ECB decisions at issue”. In response, the ECB stated that it takes note of the German court ruling and remains fully committed to its mandate, adding that the EU Court of Justice ruled in December 2018 that it was acting within its price stability mandate. Since then, ECB policymakers have been resolute in their stance, with Germany’s Schnabel stating that she does not think it will come to the situation whereby the Bundesbank will be ordered to stop purchasing German bonds. That said, source reports last week indicated that the Bank is working on a contingency plan to carry out PSPP even without the Bundesbank.
RATES: From a rates perspective, consensus looks for the Bank to stand pat on the deposit, main refi and marginal lending rates of -0.5%, 0.0% and 0.25% respectively. At the March meeting, officials resisted market expectations that had priced in a 100% chance of a 10bps reduction to the deposit rate and since that meeting, rhetoric from the Bank has done nothing to indicate that a further adjustment lower could be on the cards. As a guide, markets currently have around 5bps of further loosening priced in by year end.
BALANCE SHEET: With rates expected to be held at current levels, focus will be on any tweaks to the Bank’s bond-buying remit with the Pandemic Emergency Purchase Programme (PEPP) currently amounting to a total size of EUR 750bln. Desks are broadly in agreement that the size of the programme will need to be expanded at some stage, however, the timing of any potential adjustment remains a sticking point. Analysts at ING look for a EUR 500bln increase in the PEPP this week on the basis that a pre-emptive move could dent unwarranted speculation in markets, as well as “the German Constitutional Court gives the ECB freedom in any tailor-made or event-related action”, something which the Dutch Bank suggests could make the PEPP more attractive for the ECB given the questions surrounding its traditional APP. Additionally, ING posits about the possibility of the inclusion of “fallen angels” in the PEPP. Morgan Stanley also look for a EUR 500bln increase this week, whilst suggesting that if the ECB are looking for a further EUR 500bln increase at the end of the year (in the event that the PEPP is extended for another year), there is a chance that they could “go the whole hog now” and come to market with a EUR 1trl increase this week. Taking a differing view, analysts at UBS believe that policymakers will wait until the July 16th meeting, at which point the programme will be expanded to a total size of EUR 1trl, with the ECB also having to provide details over its reinvestment policy at some stage. UBS notes that the ECB will likely hold fire for now on the PEPP on the basis that purchases currently amount to EUR 240bln of the EUR 750bln and thus the programme still has some room to run. Furthermore, in the absence of the Bundesbank issuing its “proportionality” report by the time of the June meeting, the ECB will wish to avoid the impression that it is forcing the German central bank to defy the German court ruling. Additionally, policymakers could also wish to buy time and wait for the outcome of negotiations on the EU recovery fund with the so-called “frugal four” likely to oppose elements of the EUR 750bln proposal. Another aspect to consider is the ECB’s reinvestment policy for PEPP, however, Morgan Stanley believes that on balance, it is too early to clarify the exit strategy at this stage, albeit MS ultimately expects full reinvestment at least for an extended period after the programme ends.
ECONOMIC ASSESSMENT: This week’s meeting will also be accompanied by the latest round of macro projections from the Bank which will inevitably see a downgrade to the current 0.8% GDP forecast for 2020; note, the ECB appear to be guiding for a contraction of between 8 and 12%. Greater focus instead could be placed upon the 2021 and 2022 expansions for insight into how quickly the ECB expects the EZ economy to recover; forecasts currently stand at 1.3% and 1.4% respectively. UBS suggests that 2021 could get an upgrade to 4.6% and 2022 be raised to 2.9%. Inflation forecasts are set to be downgraded from 2020 through 2022 with UBS providing the following expectations: 2020 lowered to 0.4% from 1.1%, 2021 cut to 1.0% from 1.4% and 2022 reduced to 1.4% from 1.6%. Note, the ECB could opt to publish various economic scenarios, rather than its traditional specific yearly forecasts.
Below we share the always insightful ECB cheat sheet from ING Economics, whose base case is also an increase in the PEPP by €500BN to €1.25 trillion.
* * *
In his preview of the ECB’s latest policy action, Saxo Bank’s head of macro analysis, Christopher Dembik writes that he is onside with consensus in expecting an increase of the PEPP of EUR 500bn and its extension until 2021. The ECB is also likely to take note of the most recent data and downgrade its macroeconomic projections for this year. Any explicit reference to long term deviation from capital keys would be very welcome by market participants as it would signal that the ECB is ready to show flexibility over time to help countries most affected by the crisis and to avoid a widening of sovereign spreads.
The ECB systemic stress indicator initially developed by Hollo, Kremer and Lo Duca in 2012, and based on fifteen financial stress measures, points out that further support from the ECB is needed to limit financial issues that could slow down the recovery. Though it has receded from its annual peak reached in mid-March, it remains in risk-zone territory at 0.25. To address ongoing tensions and absorb all the new coronavirus debt issued by euro area countries, we expect the ECB to increase the size of its new Pandemic Emergency Purchase Programme (PEPP) from EUR 750bn to EUR 1.25tr and extend it beyond 2020, at least until June/September 2021.
Following the release of the worst euro area GDP figure on record in Q1 (at minus 3.8% QoQ) and given the second quarter print will be even worse due to the impact of strict lockdown, the ECB is likely to downward its macroeconomic projections for 2020. One month ago, the ECB presented different growth scenarios, with GDP contraction reaching -5% to -12% before a rebound in 2021 between +4% to +6%. We think the baseline growth forecast should be close to the most severe scenario, around -10% this year. The amplitude of the rebound in 2021 will be highly dependent on fiscal policy and the steady implementation of the EU recovery fund worth EUR 750bn presented last week by the EC. In this regard, uncertainty remains since the political bargaining between member states has just started. Thought it is a positive step forward, this is not the “Hamilton moment” expected by many European enthusiasts. It is ill-timed – the peak of the stimulus package will be reached only in 2024! – and it is insufficient in terms of amounts allocated to cope with the economic disaster, especially in countries most hit.
During the press conference, any explicit reference to long term deviation from capital keys could be bullish for the market. It would constitute a clear signal that the ECB is eager to show flexibility in running its PEPP and is committed to do whatever it takes to avoid a widening of euro area sovereign spreads.
We cannot exclude the possibility the ECB could give indications of increase in supranational bonds purchases, whenever it will be the right time, in order to absorb debt issuance linked to the EU recovery fund. It would also have the advantage of mitigating issuer limit since the relative share of sovereign bonds would automatically decrease.
Finally, as it clearly appears the initial shock from the COVID-19 outbreak is mostly deflationary, the ECB could put back on the table the topic of the inflation target that is initially part of its strategy review. A more symmetrical inflation target of, say, 1.5-2.5% in the medium run with a goal to average 2% in the long run, could be clearer and simpler than the current definition. It would also substantially reinforce the credibility of the ECB’s forward guidance in order to address growing deflationary risks.
ECB Post-pandemic policy options:
In case further monetary policy easing would be needed in the long run, the ECB is not running out of ammunition. Below, we have ranked the potential new measures from most likely to least likely to occur:
Lower TLTRO rate: TLTRO is one of the most powerful tools in the ECB toolbox. It is the least politically sensitive – the latest ECB minutes showed broad support to TLTRO – with the biggest positive economic impact and little or no stigma attached. Further TLTRO cut is on the top of the agenda if the ECB needs to act further.
Bank loans purchases: The ECB can also decide to buy private assets. Purchase of bank loans (corporate loans), as the Federal Reserve is doing with the Main Street Lending Facility, could be one option to encourage banks to give money more freely to businesses in need of a loan and free them of most of the associated risk.
HY purchases: The ECB might need to include HY bonds in its PEPP, focusing primarily on fallen angels, if the euro area faces a wave of credit downgrade in the coming months as the real impact of the crisis will be more visible.
More negative rates: Unlikely due to the negative consequences on banks’ profitability.
Yield Curve Control: It is mostly an exit strategy in case the ECB would like to run the economy hot when the recovery will materialize while preventing yields from rising too fast. The incremental approach could consist in targeting front-end yields (i.e. up to two years) to make sure borrowing costs would remain low. However, it faces both technical and legal constraints. YCC can work fine in true monetary unions, like the U.S. or Japan, but in the euro area it would imply that the ECB targets several yield curve simultaneously – which would seriously complicate the task. On the top of that, the ECB is legally bounded to buy assets provided that it respects principle of proportionality – which would not be the case with YCC.
OMT programme: It is still part of the toolbox, but it is a last-resort measure that could be activated only in case of an unexpected and sudden credit crunch that would limit member states’ access to public markets.
- "Everything Is Telling You "No, It's Not OK", And Then You Look At The S&P 500 – It Keeps Going Up"
“Everything Is Telling You “No, It’s Not OK”, And Then You Look At The S&P 500 – It Keeps Going Up”
Tyler Durden
Wed, 06/03/2020 – 22:26There’s a lot of confused traders out there.
That’s the conclusion from reading some of the trader quotes in Bloomberg’s article about how “The Things That Used to Matter to Stock Investors Don’t Anymore” and which, as the title suggests, explains that “neither rising earnings, nor economic growth, nor bargains matter” in the rally that has swept markets since March.
We find all of that surprising, because while Bloomberg is right and neither earnings, nor economics, nor valuation matter, what does matter is what Bill Dudley finally admitted to today, namely that the Fed is “basically creating a little bit of moral hazard” and since moral hazard is a binary condition – it is either there or it isn’t – what happened is that as Scott Minerd said, the Fed “sent the world a buy signal“ and the world responded as requested.
But don’t take our word for it – look at what the companies themselves are doing. Having drastically slashed buybacks and takeovers to just $12 billion last month, the second-lowest level in the past decade, according to TrimTabs, corporations have unleashed a record stock selling spree, pushing the total to a record $94 billion.
Cash-strapped, some would say insolvent, firms from airlines to cruise lines rushed to take advantage of the euphoria and sell shares to shore up their balance sheets. Companies including Warner Music Group and ZoomInfo Technologies launched IPOs, seeking to raise money and take advantage of a market multiple that’s expanded to a record high. As a result, equity sales in May more than tripled the 12-month average, according to TrimTabs.
Yet this clearest sign of a top – after all who knows their own stock prospects better than the companies themselves and they are dumping to sell – has been completely ignored, as retail daytraders and systematic funds have continued to chase momentum in a market where according to Bloomberg calculations, $9 trillion was added to equity values in 10 weeks, with the Nasdaq 100 surging 38% since its March low and briefly eclipsed its all-time closing high on Wednesday.
Yet while it all makes sense if one just accepts that only the Fed matters, some traders still seek strands of logic and reason in a market that disconnected with underlying data a decade ago:
“All those things are telling you everything is not OK, and then you look at the S&P 500 – it keeps going up,” said Jerry Braakman, chief investment officer of First American Trust in Santa Ana, California. “The market doesn’t care about valuations. With the Fed continuing to step in, the right bet has been to bet with the Fed. The trends are your friends right now, just keep riding it higher and it’s almost a little bit like, stick your head in the sand.“
Yes Jerry, that’s right, just stick your head in the sand and buy: the Fed’s got your back, so what can possibly go wrong?
Well, for one, the euphoria eventually dry up and companies may no longer be able to “distribute” their shares to gullible momentum chasers.
“The staggering volume of new offerings should be of concern to market participants,” said Winston Chua, an analyst with TrimTabs. “The more shares in the marketplace, the harder it is for existing shares to move higher, all else being equal.”
The risk, as we laid out two weeks ago in “Companies Call The Market Top With Most Stock Sales In Eight Years“, is that sooner or later, investors will reverse their stance to join corporations in unloading stocks, as Goldman warned recently when it said that with buybacks fizzling, the market is vulnerable to shocks, unlike years past when companies helped keep equity losses from snowballing by launching massive buybacks at inflection points. To wit, the market’s bottom in February 2018 came in a week when Goldman Sachs’s corporate-trading desk saw the busiest buyback orders ever.
And while a top is certain, the question is when.
For now, it’s just the opposite as investors appear to have run out of “safe” megacaps and are chasing increasingly riskier exposure, snapping up banks and small caps, companies seen benefiting most from an economic rebound (how ironic, considering that an economic rebound is the worst possible outcome for traders as it would mean an end to the Fed’s massive stimulus). No surprise that Citigroup’s sentiment model, which tracks factors such as fund flows and options trading, is pointing to a state of euphoria among investors.
Why? The answer is simple: the Fed has created the biggest legalized casino in the world, and with everyone winning who would want to leave when the fun is just starting.
“The talks from Federal Reserve officials and other government officials that basically they’re willing to take whatever it takes to make sure the economy can get back on track gives investors the feeling that there is really no significant risk in stocks,” said Michael Ball, managing director of Denver-based Weatherstone Capital Management. “Things like fundamentals and buybacks don’t matter until they matter, and people over-correct for that.”
* * *
Yet while everyone is confused as to why the Fed can continue doing what it does (as Eric Peters said over the weekend, “Stocks Are Going Parabolic For All The Wrong Reasons: The Fed Made A Massive Mistake“), including professional investors, there do occasionally emerge nuggets of clear insight such as the following excerpt from Benjamin Bowler:
“Perception can become reality, as investors heavily trained since the GFC to not fight the trend, feel forced to chase. A risk then is succumbing to reflexivity – that is inferring fundamentals from prices and believing markets are correctly forecasting a rosy future, despite much needing to go right for that to be the case… Hence, the key in our view is appreciating the more likely drivers of markets here (a feedback loop fuelled by the perception of quant + promise of policy + the fear of missing out) rather than letting buoyant prices seed overconfidence that markets can truly shrug off the worst recession since the great depression (something not seen in 90yrs).”
- The Controlled Burn Rages Out Of Control
The Controlled Burn Rages Out Of Control
Tyler Durden
Wed, 06/03/2020 – 22:20Authored by Ben Shaprio via RealClearPolitics.com,
In the wake of riots that have spread across America, leaving shattered businesses and wounded communities in their wake, it feels as though our nation is collapsing around us. That’s bizarre, considering that virtually all Americans agree with the following two propositions:
first, that it is evil for a police officer to place his knee on the neck of a prone suspect struggling to breathe for eight long minutes;
second, that breaking store windows; stealing televisions and shoes; beating business owners; and attacking police officers is wrong.
That seeming unanimity should mean unity in the face of police brutality and rioting and looting.
It doesn’t.
It doesn’t because members of our political class have decided that instead of rallying against obvious evil, Americans must be categorized as enlightened or benighted based on their answer to one question:
Was America and is America rooted in racism and bigotry?
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If you answer in the negative, you are complicit in racism and bigotry, say our media, academic leaders and high-ranking members of the Democratic Party.
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If you answer in the affirmative, you may be categorized among the woke, the aware, the sensitive and the decent.
This is a nonsensical and dangerous game. But it’s a game pressed forward by the most powerful messaging institutions in our society: our media, who award Pulitzer Prizes to faux history like The 1619 Project, which argues that every American institution has been fatally corrupted by America’s original sin, slavery, and that every inequality of today can find its root in inequities of the past; our celebrities, who proudly proclaim that rights to free speech, property ownership and due process are merely facades for the continuing and malign maintenance of structural inequalities; and too many of our politicians, who casually attribute every instance of police brutality to deep-seated American racism.
These are lies. America’s history is replete with racism and oppression, but that’s because America didn’t hold true to her founding ideals; America’s philosophy is good and true, and her flaws are thanks to her failures to follow that philosophy. It is a lie to attack Americans’ fundamental rights as outgrowths of persecution. And it’s a damnable calumny to liken the treatment of black Americans in 2020 to the treatment of black Americans in 1960, let alone 1860. Yet we are told by our institutional elites that to point out these lies is to refuse responsibility, to provide cover for racism.
Declaring America’s most fundamental structures corrupt and cancer-ridden is deeply dangerous. Once a structure has been condemned, its foundations declared unstable, it can only be destroyed. There is no way to argue that fealty to a particular political program inside that supposedly corrupt structure can fix the problem. Former President Barack Obama, who declares that discrimination exists in “almost every institution of our lives,” and that “the legacy of slavery, Jim Crow … that’s still part of our DNA that’s passed on,” says that voting for local officials is the solution to police brutality and individual instances of racism. Somehow, so long as we vote for the same Democratic politicians who have governed nearly every major American city for decades, America’s founding sins can be extirpated. Is anyone expected to believe this? Our elites cannot set fire to the fundamentals of America and then hope to contain that fire to occasional trips to the voting booth.
So Americans are left with a choice.
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We can either think of one another with charity and accuracy, acknowledging the sins of America’s past while recognizing that America remains a beacon of freedom and decency.
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Or we can continue to follow the path of those who would tear us apart.
To follow the latter course isn’t sensitive or moral.
It places the very existence of our common republic at risk.
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- Brands Cut Ties With Popular 'Mommy' Influencer Who "Re-Homed" Disabled Toddler
Brands Cut Ties With Popular ‘Mommy’ Influencer Who “Re-Homed” Disabled Toddler
Tyler Durden
Wed, 06/03/2020 – 22:00Brands are cutting ties with a popular Mommy YouTuber after she and her husband admitted they “re-homed” their adopted son, Huxley, a 4-year-old Chinese-born baby suffering from a sensory disability and severe autism.
During a video, the pair decided to address questions about why their son was no longer appearing in videos with them. The pair admitted that Huxley had been given to a “new mommy” who is “much better equipped” to take care of him in his new “forever home”, including being a trained medical professional.
The pair didn’t offer any additional information about the child’s whereabouts, and apparently the fact that they were using terms typically applied to rescue animals – and the offense this might cause – were lost on the two parents.
“As an adoptee, the term ‘rehoming’ is offensive, because it’s traditionally used with rescue and shelter animals as if they weren’t the initial right fit. In adoptions of children, the term can be associated with placing children in new homes and, if not researched, that can (and has) put children in danger,” said Lisa Cleary, author of “How to Survive a Breakup: When All of Your Friends are Birthing Their Second Child.”
John DeGarmo, director of The Foster Care Institute and a foster care expert, said his initial reaction was, “Oh my goodness. Not again.”“I have experienced this in my own home. I had a child come to my home who was adopted by three different families,” he told TODAY Parents.
Of course, Influencers have come in for special scorn this week, as several viral videos showed influencers pretending to help with the cleanup…
*Ralph Wiggum voice*
I’m helping pic.twitter.com/5WsFz60NBe— influencersinthewild (@influencersitw) June 2, 2020
https://platform.twitter.com/widgets.js
….or pretending to sympathize with the protesters…
I knew this would happen eventually pic.twitter.com/V3bB92iaPB
— influencersinthewild (@influencersitw) June 1, 2020
https://platform.twitter.com/widgets.js
…and we’re likely to see more of this, since Coachella was cancelled this year…and Burning Man will likely see the same fate.
- Bricks, Fires, Frozen Bottle Projectiles: The Organized Tactics Of America's Violent Rioters
Bricks, Fires, Frozen Bottle Projectiles: The Organized Tactics Of America’s Violent Rioters
Tyler Durden
Wed, 06/03/2020 – 21:40Authored by Christine Dolan and John Solomon via JustTheNews.com,
Law enforcement officials across the country say the anarchists who are inflaming peaceful demonstrations honoring George Floyd and transforming them into violent riots are more organized, better coordinated and supplied than any militants seen in civil discord in years.
Police intelligence units have uncovered encrypted and walkie-talkie communications as well as social media postings that coordinate the delivery and hiding of weapons and projectiles and the direction of anarchists to specific locations at specific times.
In essence, these professional rioters have created command-and-control apparatus as well as supply chains unseen in prior riots that followed the deaths of Michael Brown (Ferguson, Mo.) and Freddie Grey (Baltimore) and the verdict in the case of those officers who beat Rodney King (Los Angeles).
One federal law enforcement official told Just the News, “The anarchists have upped their game.”
U.S. Park Police Acting Chief Gregory T. Monahan said Tuesday one of the most troubling tactics seen near the White House is anarchists trying to grab police weapons during clashes. Other weaponry, he said, was being hidden in areas for perpetrators to pick up to use against officers.
“Intelligence had revealed calls for violence against the police, and officers found caches of glass bottles, baseball bats and metal poles hidden along the street,” he said.
In other cities, stacks of bricks have been discovered in staging areas that end up being slammed against store windows by looters.
In New York City, rioters appear to have developed a scouting system to pick targets for fires and looting or to exploit holes in police protection. In the Big Apple, two lawyers were arrested after tossing a molotov cocktail into a police van.
The anarchists have “developed a complex network of bicycle scouts to move ahead of demonstrators in different directions of where police were and where police were not for purposes of being able to direct groups from the larger group to places where they could commit acts of vandalism including the torching of police vehicles and Molotov cocktails where they thought officers would not be,” John Miller, the NYPD’s deputy commissioner for terrorism, disclosed this week.
Miller added that pre-planning by the anarchists included the preparation of supply lines for such items as gasoline, bottles and rocks as well as medics who could care for injured rioters.
“Before the protests began, organizers of certain anarchist groups set out to raise bail money and people who would be responsible to be raising bail money, they set out to recruit medics and medical teams with gear to deploy in anticipation of violent interactions with police,” he said.
The most intense instigators share similar language, blaming capitalism, globalism, chauvinism, oppression, and America overall, police officials said.
Spray painted graffiti messages, signs and chants commonly seen by the cops range from “F**k Capitalism” to “Death to America.”
“This time they are more organized, more strategic, even angrier,” said one Midwest law enforcement official, “and this is beyond criminal justice.”
“Now, we have older local citizens who have protested peacefully for decades calling us and telling us, ‘I am not going out there because there is going to be violence.’ That is where this has gone.”
In local meetings where demonstrators strategize their objectives, which is a normal demonstration plan, the outsiders are hijacking the peaceful demonstrators’ objectives with little to no regard for the local communities, emphasizing a call for a violent revolution, officials said.
The goal of the anarchists appears to be to instigate large numbers of locals to create chaos and additional violence and looting. About one out of every seven people arrested by the NYPD were outsiders aligned to such anarchist groups, officials have said.
Law enforcement officials told Just the News that anarchists are dispersing among the crowds in two or threes, draped with backpacks, hoodies, walkie-talkies with telltale signs of instigating violence or panic.
Former Ferguson, Mo., police chief Tom Jackson, who lost his job after the 2014 police shooting of Michael Brown and subsequent rioting, said the anarchists’ tactics in 2020 appear more organized and more widespread than what he experienced in Ferguson. Brown’s death was ultimately ruled justified.
“What it seems like is organized anarchy,” Jackson told the John Solomon Reports podcast on Tuesday.
“These folks seem to be well-coordinated and well-funded. I think there is some sort of logistics support. This has really evolved into a sort of an insurgency that is hiding behind protesters and people exercising their rights.”
Jackson said police will need to adapt their tactics to mirror those used by the military during wartime insurgencies overseas, particularly psychological and communications operations on social media.
“We had no idea the power of social media. We do now. It is how these folks are communicating in these riots,” he said
The challenge is most police departments, especially smaller ones, don’t have the resources to staff a full-time social media operations team, he said.
So instead, Jackson is recommending a special reserve unit be created — from paid to volunteer — to parachute in or be activated when rioting crises occur.
“What I was kind of recommending is having a major case squad of social media people, who could be called up as volunteers or otherwise who can attack the social media attacks on the police so for everything the streamers are putting out the police department is putting out the truth and its own story line so you can at least fight back,” he said.
- A Third Of Americans Who Lost Their Job Due To COVID Still Waiting For Unemployment Benefits To Arrive
A Third Of Americans Who Lost Their Job Due To COVID Still Waiting For Unemployment Benefits To Arrive
Tyler Durden
Wed, 06/03/2020 – 21:20Almost 33% of unemployment benefits that have been applied for as a result of coronavirus-related job losses have still not been paid. This is despite the fact that the Treasury has disbursed $146 billion in benefits in three months through May, which is more than all of 2009.
Recall, policymakers responded to the virus outbreak by offering $600 per week more in unemployment than usual. The goal was to keep people home and prevent the virus from spreading.
But this number still isn’t enough: the total amount owed to Americans during the same period was $214 billion, according to Bloomberg:
The Treasury reports its unemployment disbursements daily. Bloomberg’s calculation of what should have been paid is based on continuing claims for benefits, including those filed under a special program that widened the safety net to include contractors and gig workers. (It assumes filings for missing weeks in May will be in line with the average in preceding weeks).
Those claims were multiplied by the weekly unemployment benefit, using the $378 state average plus the $600 boost that’s due to expire at the end of July.
The $67 billion difference is proof positive that emergency efforts to boost and disburse payments are falling short.
Jay Shambaugh, an economist at Brookings Institution, said: “There’s a lot more money that should have gone out that has not gone out.”
More than 40 million people have filed for unemployment amidst the economic shutdown. This includes 7.8 million people claiming under the Pandemic Unemployment Assistance program for independent contractors. And the lack of payments are coming at the worst possible time, as racial tensions have gripped the nation and widespread rioting and looting is taking place.
At the same time, economists believe another 1.8 million people filed for unemployment last week and that Friday’s numbers will show a jobless rate of 19.5%, the highest since the Great Depression.
Bob Radcliffe, who lives in Morristown, New Jersey filed for unemployment in March and is now owed almost $15,000. He has four children under eight and says he hasn’t received any benefits yet. He is taking his bank up on a three-month mortgage forbearance to survive.
“I’ve had money to live. I’m not a desperate case. But I’m running out,” he said.
The Labor Department dispute’s Bloomberg’s use of its weekly claims report to extrapolate its data, stating: “It is also challenging to use these numbers because states are struggling to keep up with demand and some have backlogs they are working through.”
Meanwhile, Bloomberg thinks it has underestimated the amount owed to Americans.
Texas, for example, has a backlog of 650,000 claims. The state has seen more than 2.6 million claims filed since March. The state has added to its staffing by redeploying other workers, but attention has also been drawn to helping people find jobs and re-opening the state. 20% of workers in the state’s oil and gas industry have filed for unemployment.
And a failure to extend benefits nationwide could prolong the crisis, according to Diane Swonk, chief economist at Grant Thornton LLP. While the $1,200 benefits have momentarily helped families pay for rent or initial food bills, it also amounts to a little more than a week’s pay for many.
Swonk said: “We’re really talking about an economy that is going to be operating at a fraction of its capacity for a long period of time.”
Ernie Tedeschi, a former U.S. Treasury economist now at Evercore ISI concluded: “On paper the U.S. strategy is very generous. But that generosity on paper is meaningless if it doesn’t translate into actual money in people’s pockets when they need it.”
- Three Ways Lockdowns Paved The Way For These Riots
Three Ways Lockdowns Paved The Way For These Riots
Tyler Durden
Wed, 06/03/2020 – 21:00Authored by Ryan McMaken via The Mises Institute,
There were many reasons to oppose the COVID-19 lockdowns.
They cost human lives in terms of deferred medical treatment. They cost human lives in terms of greater suicide and drug overdoses. Domestic abuse and child abuse have increased. There is also good reason to believe that lockdowns don’t actually work. The lockdown activists capitalized on media-stoked fear to push their authoritarian agenda based not on science, but on the whims of a handful of experts who insisted that they need not present any actual evidence that their bizarre, draconian, and extreme scheme was worth the danger posed to human rights, health, and the economic well-being of billions of human beings.
Those who lacked the obsessive and irresponsible tunnel vision of the pro-lockdown people warned that there were other dangers as well, in terms of social and political conflict.
It didn’t require an especially clear crystal ball to see that destroying the livelihoods of countless millions while empowering a police state to harass and arrest law-abiding citizens would create a situation that maybe—just maybe—could lead to greater social and political conflict.
Specifically, there are three ways in which the lockdowns laid the groundwork for our current state of unrest.
The Lockdowns Created an Economic Disaster
The COVID-19 stay-at-home orders, business closures, and other forms of coerced social distancing have so far led to job losses for well over 30 million Americans. The unemployment rate has risen to levels not seen since the Great Depression. Food banks are under strain as Americans line up for free food. Thanks to government moratoria on evictions in many areas, it is still unknown to what extent homeowners and renters are unable to pay mortgages and rents, but a wave of delinquencies is almost certainly coming.
To advocates of lockdowns, this is all “worth it” even though these sorts of economic stresses often lead to suicide, stress-induced disease, and death. But impoverishment, unemployment, and financial ruin are all merely “inconvenient,” as described by head lockdown advocate Anthony Fauci.
To someone who isn’t enamored of lockdowns, however, it is clear that millions of job losses are likely to worsen a variety of social ills, sometimes even resulting in violence. Moreover, the current job losses appear to be affecting the young and those who earn lower incomes most.
Lockdown advocates have attempted to avoid responsibility for all this by claiming that it is the pandemic itself that has caused the current economic disaster, and not the lockdowns. This is a baseless assertion. As has been shown, neither the pandemics of 1918 or 1958 led to the sorts of job losses and decline in economic growth that we’re now seeing.
The Lockdowns Destroyed Social Institutions
Another outcome of the lockdowns has been the destruction of American social institutions. These institutions include schools (both public and private), churches, coffee shops, bars, libraries, barbershops, and many others.
Lockdown advocates continue to claim that this is no big deal and insist that people just sit at home and “binge watch” television shows. But researchers have long pointed to the importance of these institutions in preserving peace and as a means of defusing social tensions and problems.
As much as lockdown advocates may wish that human beings could be reduced to creatures that do nothing more than work all day and watch television all night, the fact is that no society can long endure such conditions.
Human beings need what are known as “third places.” In a 2016 report, the Brookings Institution described what these places are:
the most effective ones for building real community seem to be physical places where people can easily and routinely connect with each other: churches, parks, recreation centers, hairdressers, gyms and even fast-food restaurants. A recent newspaper article on McDonald’s found that for lower-income Americans, the twin arches are becoming almost the equivalent of the English “pub,” which after all is short for “public house”: groups of retirees meeting for coffee and talk, they might hold regular Bible study meetings there, and people treat the restaurant as an inexpensive hangout.
Third places have a number of important community-building attributes. Depending on their location, social classes and backgrounds can be “leveled-out” in ways that are unfortunately rare these days, with people feeling they are treated as social equals. Informal conversation is the main activity and most important linking function. One commentator refers to third places as the “living room” of society.
The lockdown advocates, in a matter of a few days, cut people off from their third places and insisted, in many cases, that this would be the “new normal” for a year or more.
Yet, these third places cannot simply be shut down—and the public told to just forget about them indefinitely—without creating the potential for violence and other antisocial behavior.
Indeed, third places act as institutions that provide a type of social control that is key to a well-functioning society. In his trenchant book The Revolt of the Elites and the Betrayal of Democracy, historian and social critic Christopher Lasch described the importance of third places in communicating political and social values and conventions to young people, and in setting the bounds of acceptable behavior within the community. Lasch notes that these institutions are also important in defusing violent impulses among the young. Also of great importance is the fact that third places provide a means of social control that is voluntary and not a form of state coercion.
Writing in the 1990s, Lasch was lamenting the decline of third places, although he emphasized their importance even in their modern reduced form. Thanks to the lockdowns, however, these places have been crippled far beyond what Lasch might ever have imagined.
The Lockdowns Empowered the Police State
The lockdowns have created a situation in which millions of law-abiding citizens have been deemed criminals merely for seeking to make a living, leave their homes, or engage in peaceful trade.
In many areas, violations of the lockdown orders have been—or even still are, in many places—treated as criminal acts by police. This has greatly increased negative interactions between police and citizens who by no moral definition are criminals of any sort.
Many have already seen the stories: police arresting mothers for using playground equipment, police arresting business owners for using their own property, police beating people for the “crime” of standing on a sidewalk.
Complicating the issue is the apparent fact that police have not enforced social distancing edicts “uniformly.” Some have alleged, for example, that the NYPD has lopsidedly targeted nonwhites in enforcement:
of the 40 people arrested [for social distancing violations in Brooklyn between March 17 and May 4], 35 were African American, 4 were Hispanic and 1 was white. The arrests were made in neighborhoods—Brownsville, Bedford-Stuyvesant, Cypress Hills and East New York—which have large concentrations of blacks and Latinos.
This may or may not reflect the reality of the general situation, but the fact is that the lockdowns created the perception among many that this is just yet another case of law enforcement targeting certain populations over small-time violations.
Moreover, it is quite plausible that lower-income populations have more often been on the receiving end of state harassment in the name of social distancing. After all, compliance with lockdowns is something of a luxury reserved for higher-income, white-collar residents who can work from home and remain comfortable for long periods in their roomy houses. Working-class people and those with fewer resources are far more likely to need to find income and venture outside during lockdowns. This attracts the attention of police.
Lockdown advocates, apparently in their usual state of extreme naïvete, perhaps believed that further empowering police to violently enforce government decrees against petty infractions would not lead to any unfortunate side effects down the road. Yet criminalizing millions of Americans and subjecting them to heightened police harassment is not a recipe for social tranquility.
Worsening a Volatile Situation
Of course, my comments here should not be interpreted as making excuses for rioters. Smashing up the property of innocent small business owners—or worse, physically harming innocent people—is reprehensible in all circumstances. But this isn’t about making excuses. We’re talking about avoiding extreme and immoral government policies (i.e., police-enforced lockdowns) that remove those institutions and conditions which are important in helping minimize conflict.
Some may insist that the riots would have occurred no matter what, but it’s easy to see how the lockdowns made a bad situation worse. Yes, some of the rioters are lifelong thugs who are always on the lookout for new opportunities to steal and maim. But experience suggests that the pool of people willing to engage in riots is often larger during periods of mass unemployment than during other periods. In addition, those people who exist on the margins of criminality—the sorts of people for whom third places serve an important role in moderating their more antisocial tendencies—are more likely to be swept up in these events when third places are abolished. And, as we have seen, lockdowns also create more opportunities for police abuse that ignite riots of the sort we’ve seen in recent days.
It’s true the responsibility for the riots lies primarily with the rioters. But we cannot deny that policymakers fuel the flames of conflict when they outlaw jobs and destroy people’s social support systems by cutting them off from their communities. It’s also wise to not provoke people by pushing for widespread human rights violations and additional police harassment. But this is what lockdown advocates have done, and their imprudence should not be forgotten.
- Talkspace Pulls Out Of Facebook Partnership, Says The Platform "Incites Racism, Violence And Lies"
Talkspace Pulls Out Of Facebook Partnership, Says The Platform “Incites Racism, Violence And Lies”
Tyler Durden
Wed, 06/03/2020 – 20:40Online therapy company Talkspace is pulling out of a partnership with Facebook because the social media platform has failed to moderate posts from President Trump.
After the president Tweeted “when the looting starts, the shooting starts,” in response to nationwide riots several days ago, Talkspace’s CEO made the announcement on Twitter, saying “We will not support a platform that incites violence, racism and lies.”
We at @Talkspace discontinued our partnership discussions with @Facebook today. We will not support a platform that incites violence, racism, and lies. #BlackLivesMatter
— Oren Frank (@orenfrank) June 1, 2020
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Frank told CNBC that the deal between the two companies was as content partners, with Facebook being able to use Talkspace to provide free therapy to certain audiences. When the two companies first started talking, Frank said, they were focusing their efforts on students.
Talkspace’s blog gets about a million views per month and the deal would have involved Talkspace generating content for Facebook. Frank said the deal would have paid his company six figures.
Frank told CNBC: “It’s a huge potential opportunity and a relationship with the largest media company in the world. I don’t think they are evil people, but do think they turned out to be an evil company.”
Facebook has taken a turn toward mental health in the last few years. Both Facebook and Instagram have caught some of the blame for increasing people’s anxiety because of time spent on the social networks.
Frank has been a long-time critic of Facebook, even describing social media as the “new cigarettes” in 2016.
Frank said the deal was in its final stages and he canceled it after reading the news this weekend.
Facebook employees, meanwhile, staged a “virtual walkout” to protest the President’s statements last Thursday. Facebook, as a platform, did not regulate Trump’s post. Twitter, on the other hand, placed a warning on Trump’s statement late last week.
“We encourage employees to speak openly when they disagree with leadership. As we face additional difficult decisions around content ahead, we’ll continue seeking their honest feedback,” Facebook concluded.
- The State's Priority Is Protecting Itself, Not You
The State’s Priority Is Protecting Itself, Not You
Tyler Durden
Wed, 06/03/2020 – 20:20Authored by Bradley Thomas via The Libertarian Institute,
Murray Rothbard pointed out in his book Anatomy of the State how the state is far more punitive against those that threaten the comfort and authority of government institutions and workers than they are against crimes against citizens.
This, according to Rothbard, exposed as a myth the notion that the state exists to protect its citizens.
“We may test the hypothesis that the State is largely interested in protecting itself rather than its subjects by asking: which category of crimes does the State pursue and punish most intensely—those against private citizens or those against itself?” Rothbard wrote.
“The gravest crimes in the State’s lexicon are almost invariably not invasions of private person or property, but dangers to its own contentment, for example, treason, desertion of a soldier to the enemy, failure to register for the draft, subversion and subversive conspiracy, assassination of rulers and such economic crimes against the State as counterfeiting its money or evasion of its income tax.”
Boy how recent events have proven Rothbard right.
For weeks, we saw police aggressively pursuing and punishing peaceful people merely violating arbitrary lockdown orders to go surfing, cut hair, or host a child’s play date.
But in the first nights of the George Floyd protests, police allowed rioters to run amok destroying property, with political leaders dismissing the damage as unimportant.
This stark contrast in police responses dramatically underscores Rothbard’s point.
Take the first nights of rioting in Minneapolis. As reported by the Manhattan Institute’s City Journal, Minneapolis Mayor Jacob Frey, the source of the “police stand-down order that allowed his own city to burn,” merely “shrugged off responsibility and minimized the damage.” Moreover, according to the report, “Frey kept repeating that the destruction was ‘just brick and mortar.’”
And consider the example of Raleigh, North Carolina Police Chief Cassandra Deck-Brown, who said:
When the greater risk is of injury to the officer, and I had five injured last night – a building? A window? A door? The property that was in it can easily be replaced. But for a person who has had officers shot. And more recently than not, I will not put an officer in harm’s way to protect the property inside of a building. Because insurance is most likely going to cover that as well but that officer’s safety is of the utmost importance.
Got that? The officer’s safety is the primary concern, not the property of citizens. Agents of the state whose sole job is supposedly to protect the people and their property instead refuse to do their job at the first hint of danger.
Video of Arby’s in Minneapolis burning.
Please note the brief image of celebratory fireworks as the building burns.
Welcome to the New Normal in riot etiquette. pic.twitter.com/HyxFXzUjpc
— John McAfee (@officialmcafee) May 29, 2020
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Worse still, as Ryan McMaken pointed out in a recent article at Mises.org, “A failure to protect taxpaying citizens from violence and crime in a wide variety of situations is standard operating procedure for police departments that are under no legal obligation to protect anyone, and where ‘officer safety’ is the number one priority.”
McMaken further notes that it is “now a well-established legal principle in the United States that police officers and police departments are not legally responsible for refusing to intervene in cases where private citizens are in imminent danger or even in the process of being victimized.”
Police absence during riots is nothing new. As McMaken wrote: “During the 2014 riots that followed the police killing of Michael Brown, for example, shopkeepers were forced to hire private security, and many had to rely on armed volunteers for protection from looters. ‘There’s no police,’ one Ferguson shopkeeper told Fox News at the time. ‘We trusted the police to keep it peaceful; they didn’t do their job.”’
As the violence of the riots intensified, mayors instructed police forces in cities across the nation to step up their presence.
But their initial reactions are the most telling.
The contrast between police actions against peaceful lockdown “violators” and the rioters is striking. The instincts of the political class was to haul mothers in parks and hair stylists away in handcuffs, while standing down and allowing private property owned by citizens to burn.
The former involved disobeying a government order, an act which would threaten the perceived authority, no matter how arbitrary, of the state. The latter involved violation and destruction of citizens’ property.
As Rothbard would have predicted, the state was far more interested in preserving the illusion of its authority than the property of its citizens.
Putting a tragic, but fine, point to Rothbard’s point: George Floyd was choked to death by a police officer sent to detain him for the “crime” of using a counterfeit $20 bill to buy cigarettes.
The state is not us. It does not exist to protect our person or property. It exists first and foremost for its own benefit and to exert power and control over its subjects.
Events of the past several weeks should make this crystal clear.
Bradley Thomas is creator of the website Erasethestate.com and is a libertarian activist who enjoys researching and writing on the freedom philosophy and Austrian economics. Follow him on twitter, @erasestate.
- "They Sent The World A Buy Signal": Minerd Says Fed Faces "Day Of Reckoning" For Unleashing The Final Bubble
“They Sent The World A Buy Signal”: Minerd Says Fed Faces “Day Of Reckoning” For Unleashing The Final Bubble
Tyler Durden
Wed, 06/03/2020 – 20:00Just hours after Former NY Fed president Bill Dudley made the stunning admission that “the Fed is basically creating a little bit of moral hazard“, stunning not because he said what everyone already knew, but because as a former member of the Fed he himself admitted that the Fed has now terminally corrupted capitalism (it should go without saying that there is no such thing as “a little bit” of moral hazard – it’s either there, or it isn’t, Guggenheim CIO Scott Minerd, who in recent months has emerged as one of the most outspoken financial establishment anti-Fed talking heads (read “We Will Never Return To Free Market Capitalism”: Guggenheim’s Minerd Warns Fed Is Pushing US Toward A Populist Revolt” for the answer why), appeared on Bloomberg TV and in a tour de force interview explained why the Fed’s efforts to stabilize the economy will encourage companies to take on too much risk, inflate a corporate-bond bubble, and ultimately result in a “day of reckoning” for the Fed which will be forced to decide if the US can ever return to its capitalist roots, or will bail out insolvent enterprises in perpetuity, in the process destroying capital markets, price discovery, and laying the foundations for a regime that is anything but capitalist (we leave it up to readers to insert their most hated ideology here).
“It’s going to allow the excessive leverage – which had already been building up into the system coming into this – to continue, and to levels that are completely unprecedented in our history,” Minerd said at a virtual insurance conference Wednesday discussing the Fed’s most recent decision to purchase corporate bonds. As a result of the Fed’s visible hand, intervention, the risk a bubble in corporate bond markets “will just be extended and become more extreme.”
Below are the key excerpts from Minerd’s interview which we hope everyone in the Fed and Washington listens to, but we know nobody will:
“We already were at record levels of debt when we got into January of this year. One of my concerns was that when we have a downturn, this highly levered economy of ours was going to lead to more severe pressures on the economy. But now the Federal Reserve has basically eliminated the downside in corporate debt, they’ve sent the world a ‘Buy signal’ and we’re now putting on record amounts of corporate debt. The leverage is getting even more exacerbated. So the Fed is ultimately going to find itself in a position where it tries to fade out these problems of support for corporate debt it will be a lot like what happened in 2013 when Ben Bernanke first talked about ending QE: there was a tantrum. It’s quite likely that the Fed will face that day of reckoning when it tries to slow down asset purchases of corporate debt. And the market will then challenge the Fed where the put is, and I think this is now a permanent feature of the market.“
After quoting Milton Friedman who once said that “nothing is so permanent as a temporary government program”, Minerd warned that “corporate America is going to become addicted to the Fed providing support. Corporations will take greater risk, that if you don’t have a highly levered balance sheet relative to your competitors your equity returns will be punished during business expansions, and so pressures will be on CEOs to continue to increase the amount of leverage especially when the Fed has got a policy of maintaining low rates for extended period of time. So I think that ultimately the Fed will be faced the challenge of whether they allow a day of reckoning, or whether they decide that they just have to continue to provide liquidity to the system until inflation rates pick up to levels that probably will be viewed as unacceptable by most participants in the Fed today.”
The Guggenheim CIO then said he expects $1 trillion in bond “fallen angel” downgrades, but pointed out that since the Fed is effectively forcing liquidity, “it removes one of the major causes of default which is the inability to roll debt maturities over. So you have to think that at some point the rating agencies are going to start factoring the implicit support of the Federal Reserve and it will in the longer-run reduce downgrades.”
Minerd then addressed the proliferation of zombie companies that the Fed’s actions will create, saying that “ultimately it will reduce productivity.” And while there may be a side benefit, as the Fed’s actions expand the number of jobs “in the short run” but the long-run implication is that it should also cause a period of stagflation, “which we probably won’t see the consequences of for another decade or so.”
The interview then shifted gears and the Guggenheim CIO address the protests and rioting we are seeing in the streets, a direct byproduct of the unprecedented divide observed in America over the past decade across wealth, income, racial, religious and ideological lines, which just happens to coincide with the Fed’s takeover of capital markets as it adopted a “stock markets above all” vision, a perpetuation of the status quo which has led to even greater gains for the 0.1% and which has resulted in catastrophic consequences for everyone else. As Minerd admits, “most of the Fed support is going to major corporations. But the majority of people in our country work for small business and we’re going to have a large amount of business failures so as the economy recovery these businesses are not going to be there to create jobs, which will put more pressure more pressure on Congress and policymakers to come up with ways to encourage people to get back to work, to encourage businesses to reopen. Some of these businesses will never come back. In retail for instance, the amount of square footage in the US is about 5 times that of the UK..
… and so the fact that we’ve had such a glut in some categories like retailing, a lot of that is never coming back and the jobs that are attached to that are not coming back, and we’re going to have to retool workers and that is going to be a major policy issues.”
When asked at “what point do debt levels matter”, or “how far the US can push the US debt capacity”, Minerd responded that the “dirty little secret of central banking ultimately the role of the central bank is to finance the government. And so this open-ended financing from the Fed will continue and is going to give a lot of flexibility to Congress to pass additional support programs and some of them may end up being highly disruptive to the capitalist system. I believe we are in the process of altering capitalism in the United States and the free enterprise system has a number of threats on a number of fronts.”
Asked to explain what he means by “different capitalism”, Minerd said that inequality of all types – racial, income, wealth – all of these are the result of poor planning and programs out of Washington.” At this point the Guggenheim CIO struck on the true answer, one which we have been pounding the table on for over a decade, saying that in addition to Washington, inequality has been exacerbated by quantitative easing:
“if you came out of the financial crisis and you had money or assets, the returns you got over the next ten years even exacerbated further the inequality among people who didn’t have assets coming out of that crisis. These policies have been fundamentally flawed – they have failed to address the broader issues that Americans face and this is going to result in changes to policies coming out of Washington.”
The real question, according to Minerd, is “will the policy changes that are coming out be done in a way that encourages increases in productivity, output and living standards for all Americans, or will it just become a fight for the pie. That is, we need to cut up the pie again and we need to transfer wealth in some mechanism, whether through income or taxation or expropriation. Those sorts of policies have proven not to be very productive and to actually lower living standards over long periods of time.”
One look at the streets of America today should give us the answer which of these two futures the country is facing.
As for Minerd, one year ago he admitted that he “had discussions about joining the Fed.” Alas, after such blistering – and accurate – insight into why the Fed is at the very root of most of society’s problems, we can guarantee the Guggenheim CIO that he will never be allowed into the Marriner Eccles building for as long as the Fed exists.
His full interview is below.
- Swarm Of Earthquakes In Yellowstone Renews Fears Of Supervolcano Eruption
Swarm Of Earthquakes In Yellowstone Renews Fears Of Supervolcano Eruption
Tyler Durden
Wed, 06/03/2020 – 19:40Authored by Jake Anderson via TheMindUnleashed.com,
The US Geological Survey says it is monitoring the area near Yellowstone National Park where a swarm of earthquakes has caused renewed concern over the area’s underground supervolcano. Although statistically unlikely, a supervolcano eruption would release the equivalent of 1,000 Hiroshima atomic bombs and wreak unprecedented destruction.
The area, West Yellowstone in Montana, reported around eleven earthquakes on Friday and a total of 34 in the last month. Though considered low-magnitude quakes, the tremors extended three miles underground.
According to Yellowstone National Park’s website:
“Yellowstone is one of the most seismically active areas in the United States…
Approximately 700 to 3,000 earthquakes occur each year in the Yellowstone area; most are not felt. They result from the extensive network of faults associated with the volcano and surrounding tectonic features.”
Situated in northwest Wyoming, Yellowstone National Park brings in millions of annual tourists, who marvel at the geysers, steam vents, and bubbling eddies of geothermally heated water.
Park officials say that earthquakes there are caused by volcanic fluids entering shallow rock fractures.
Yellowstone sits atop one of only two supervolcanos in the US. Contained within three overlapping calderas that represent past eruptions from hundreds of thousands and even millions of years ago, scientists say the Yellowstone volcano is roughly 34 by 45 miles wide and only three miles below the surface. Its last eruption was 640,000 years ago when it is estimated to have dumped over 2,000 times the amount of ash as the Mount St. Helens eruption.
Swarms of earthquakes are not unusual in the area. In 2018, the park recorded a swarm of 153 quakes. The US Geological Survey says the odds are only one in 730,000 that the Yellowstone supervolcano will erupt this year.
However, the supervolcano eruption threat has become a predictable meme in recent years, usually resurfacing during earthquakes swarms. The reason is that if the supervolcano did go off, it would definitely be a game-changer. A BBC feature on supervolcanos described the aftermath:
“The sky will darken, black rain will fall, and the Earth will be plunged into the equivalent of a nuclear winter.”
Volcanologists insist there is no imminent threat of a supervolcano eruption at the moment but larger earthquakes and hydrothermal blasts could present a real danger to tourists. Over the years, over 300 people have died at Yellowstone, in accidents ranging from driving off of 800-foot cliffs to unknowingly diving into 200-degree boiling water and succumbing to the fumes emitted by hydrothermal vents.
In 2016, a 23-year-old man fell off a boardwalk overlooking the Norris Geyser Basin and was incinerated in the high-temperature, acidic geyser below.
So while this summer’s tourists probably don’t have to worry about the earthquakes representing the eruption of the supervolcano, Yellowstone National Park visitors should bring a healthy respect for the powers of nature.
- Senate Passes Bill Allowing Small Businesses More Time To Repay Relief Loans
Senate Passes Bill Allowing Small Businesses More Time To Repay Relief Loans
Tyler Durden
Wed, 06/03/2020 – 19:28After small businesses left more than $140 billion in the expanded ‘PPP’ program tank (underlining how the Democrats’ calls for a $3 trillion stimulus package was a calculated, political tactic), the Senate on Wednesday voted to pass a bill allowing for more flexibility in how companies spend their money.
The bill was the product of a bipartisan deal that finally cleared the hurdle after Sen. Ron Johnson of Wisconsin finally relented on several changes.
One jackass. One stupid jackass in the Senate is what’s preventing the #PPP band-aid from being put on right this moment. So instead, we’ve got to bleed and wait for another at least few days. You 100 idiots have one purpose on this planet right now. Pass this bill. #TaxTwitter
— Adam Markowitz (@adammarkowitzEA) June 3, 2020
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Senate Democratic leader Chuck Schumer of New York had asked for unanimous consent to pass the legislation earlier on Wednesday, but Johnson objected at the time.
“I’m not disagreeing with the fact that we have to do something. I want to do something as well. I just want to make sure that if we do put more money into this thing it’s not going to be flowing to businesses that don’t need it…We’ve been working in good faith with the sponsors of the House bill, with Republican leadership. I reached out to Democrat leaders saying we’re very close. I think we’ll probably be able to pass the House bill with assurances, by unanimous consent, just not at this moment.”
The bill purports to respond to complaints from actual small business owners, and changes the thresholds for how much of the program’s relief money can be spent on payroll, as well as the qualifications for a loan to transition into a grant.
The House overwhelmingly approved the bipartisan bill, which would give small businesses 24 weeks to use the emergency loans, and permits them to spend as low as 60% instead of the loans on payroll, down from 75%.
Senate clears bill to give small business owners more flexibility in dealing with their PPP loans. Ron Johnson had blocked bill earlier bc he wanted assurances of changes at a later time. A deal has been cut and Senate now sends bill – which House approved 417-1 – to Trump’s desk
— Manu Raju (@mkraju) June 3, 2020
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Trump is expected to sign the bill.
It’s just the latest reminder that while the stock market is chugging along, small businesses are largely still figuring out how they’re going to keep the lights on for the next few months until things start to go back to normal.
- HSBC Bends The Knee To Beijing, Says It Will "Respect & Support" Security Law
HSBC Bends The Knee To Beijing, Says It Will “Respect & Support” Security Law
Tyler Durden
Wed, 06/03/2020 – 19:20Roughly a week after a former top CCP bureaucrat in Hong Kong hinted that it was time for HSBC to bend the knee and endorse the new “National Security” law imposed on HK by Beijing, the colonial-era bank has done just that, releasing a statement on Wednesday welcoming the new law, while continuing to
“We reiterate that we respect and support laws and regulations that will enable Hong Kong to recover and rebuild the economy and, at the same time, maintain the principle of ‘one country two systems'” HSBC said in a statement published online.
But the city’s oldest and largest bank, which is officially based in London, but derives the majority of its profits from the Hong Kong market, isn’t the only colonial-era corporate power in HK to kowtow to Beijing. Swire and Jardine Matheson, two other prominent British-based but Asia-focused companies, have already released statements of their own, with Jardine going as far as taking out an ad in a pro-Beijing newspaper.
Swire said the law “will be beneficial for the long-term future of Hong Kong as a world-leading business and financial center.”
This isn’t the first time HSBC has caved to Beijing: The bank stoked controversy by closing accounts linked to HK’s protest movement, and has persistently supported the regime, and opposed the pro-democracy movement in the past.
Analysts at some shops fear this stance, which is wildly unpopular in HK, could impact the bank’s business as locals turn elsewhere for their financing needs.
Hugh Young, managing director at Aberdeen Asset Management Asia, a large shareholder in the bank, said HSBC was “between a rock and a hard place.”
While Hong Kong will stay its biggest revenue generator, over time it could risk losing market share to Chinese banks, he added.
The position is also notably at odds with the stance taken by the UK’s conservative government, which has decried China’s encroachment on “one country, two systems”.
The irony is, no matter what HSBC says, once Beijing cements its control over HK and its economy, it will almost certainly be muscled out by Chinese rivals, which benefit from a home field advantage, and – of course – generous state backing.
- Johnstone: We Are Watching The Story Of America Crash Headlong Into The Reality Of America
Johnstone: We Are Watching The Story Of America Crash Headlong Into The Reality Of America
Tyler Durden
Wed, 06/03/2020 – 19:00Authored by Caitlin Johnstone via Medium.com,
I have a bedtime story for you.
Once upon a time a brave nation liberated itself from the tyranny of the British empire and birthed freedom and democracy into the world. With the help of heroes like the abolitionists, Abraham Lincoln, Martin Luther King Jr and Malcolm X it overcame systemic racial inequality, and now it is a shining exemplar of human rights, the respected friend of free democracies around the world and the hated foe of all tyrannical regimes. It is not without its faults and its past mistakes, but it is the best leader and protector of the liberal world order that we could possibly hope to have.
I also have a waking up story for you.
Once upon a time a nation rose to prominence after emerging unscathed from two world wars which damaged the infrastructure of its competitors. The world’s major power players quickly coalesced around this new superpower and began maneuvering other nations into a tight empire-like alliance with it. After a long and gruelling cold war, this empire succeeded in toppling the world’s only other superpower and began working to absorb all other nations into alliance with it. If nations resisted, they were subverted, sabotaged and attacked until they either collapsed or allowed themselves to be absorbed into the imperial blob.
World-spanning power structures are now centralized around this nation, which is home to the largest population of billionaires on the planet and the mightiest military force in the history of civilization. An unfathomable amount of power revolves around this nation, so mechanisms have been put in place to ensure the stability of its status quo. These mechanisms include the most sophisticated system of propaganda ever devised, an Orwellian network of domestic espionage, increasing internet censorship, and, above all, a highly militarized police force.
The operators of this globe-spanning empire have always been acutely aware that the weakest point in their machine is the possibility that the hundreds of millions of people who live in this nation may one day decide that the imperial status quo is not serving them, and that they do not want to be ruled anymore. They know that the last line of defense against this happening is their ability to use extreme violence upon the population until they stop revolting, so they have no intention of ever giving up this ability. An entire planetary empire depends on it.
Now, if you’d been hearing the bedtime story your whole life but not the waking up story, you would naturally assume that demanding an end to police brutality was the most reasonable thing in the world.
You would naturally expect that if a police officer was caught on video deliberately strangling a man to death and then was not immediately arrested and prosecuted for murder, people would be understandably outraged and drastic systemic changes would be swiftly implemented to appease their anger. You would naturally expect the shining city on the hill to side with the people over a police force’s murderous tendencies.
If you’ve heard the waking up story, you would expect no such thing.
You would understand that racial disparities never left the nation in question, and that the establishment which still keeps J Edgar Hoover’s name on the FBI building has no intention of doing anything about the police force’s role in it. You would understand that the role of the police is not to protect and serve the people but to protect and serve the empire, in the exact same way that this is the role of the military. You would understand that the empire is no more likely to voluntarily dispense with the violent tactics of its increasingly militarized police force than it is to dispense with its air force or nuclear warheads.
They’ll supply all the empty words and take-a-knee photo ops you like, but actually voluntarily disarming themselves against their subjects is not something they’re planning on doing.
This does not mean that those demanding these changes are being silly or unreasonable; demanding that the police not murder you is the most sane and reasonable thing in the world, per what the police force purports to be and per what America purports to be. It’s just that neither the police force nor America are what they purport to be. The bedtime story and the waking up story could not possibly be more different.
That is what we are witnessing here. We are witnessing the head-on collision between the story America’s political, media and educational institutions tell Americans about what their country is, and the reality of what their country actually is. The disparity between the bedtime story and the waking up story has finally been stretched to a breaking point, and now the mask of free liberal democracy is coming off in front of everyone.
We are watching a population besieged by institutional racism, economic hardship and a pandemic virus finally pushed past the breaking point, and finding themselves crashing headlong into the most unyielding part of a planet-sprawling empire. The stories are slowly clearing from the air like tear gas, and the cold, hard reality is becoming exposed to a greater and greater segment of mainstream America.
And now the leader of this nation is openly threatening martial law and trying to designate black bloc protesters as “terrorists”. Video footage of police brutality is saturating social media faster than people can watch it, First Amendment violations are sweeping from coast to coast as police chiefs, mayors and governors try to see how far they down can squeeze freedom of assembly laws, and mysterious armed men in fatigues who refuse to say who they’re with are patrolling the nation’s capital. Prison riot specialists are being recruited as expert consultants because, in the eyes of the empire, the prisoners are rioting.
We are all watching from around the world as the citizens of the hub of the empire confront their oppressors in an increasingly violent battle of wills. The violence rips apart the thin veneer of narrative that was keeping the bedtime story intact all this time. We all watch as the tattered ribbons slowly fall to the floor.
Whoever controls the narrative controls the world. The empire is losing control of the narrative. In the long run, this can only be a good thing. Sunlight is the best disinfectant, and truth is always superior to fiction.
* * *
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