Jan 05

Today’s News 5th January 2020

  • With Iran War Looming, Congress Has Been Left Out
    With Iran War Looming, Congress Has Been Left Out

    Authored by Jason Ditz via AntiWar.com,

    Congress has never authorized the use of military force against Iran, and in the initial House version of the 2020 NDAA, it was explicitly noted that there is no authorization for that war. But Thursday night rolled around, and the Trump Administration attacked and killed Iran’s top general in a strike on Baghdad International Airport.

    An unauthorized attack, but it’s more than that, as Congress was neither consulted about nor informed of Thursday’s attack. That’s par for the course for an administration that has scorned the very idea of Congressional authority in war-making time and again.

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    Image source: AFP via Getty

    Senate Majority Leader Mitch McConnell (R-KY) is saying he’s trying to set up a classified, closed-door briefing about the attack. That’s well after the fact, and McConnell already followed the Senate hawks in endorsing the killing before even getting such a briefing. It’s not clear, then, what the point would even be.

    More to the point, Sen. Tim Kaine (D-VA) is introducing a resolution aimed at blocking the war, saying that the administration must not attack Iran without an Authorization for the Use of Military Force (AUMF). There is no sign an AUMF is being considered.

    The Kaine resolution would require a two-thirds majority in both the House and Senate in practice, otherwise it would face the fate of similar resolutions on the unauthorized Yemen War, being vetoed by Trump.

    And while it may be an uphill battle to muster a two-thirds majority in the Senate to oppose the Iran War, the fact that they’re trying at all is at least indication that there is some debate that will be had on the new war. America may not have gotten this debate before the US attacked, but there will be a chance to express disapproval for the conflict.

    The Trump Administration likely appreciates that this war they’re careening toward would be unpopular, which is why officials have styled their killings as “defensive” actions, and why President Trump’s statement claimed he attacked the Baghdad Airport to “stop a war.”

    This will allow them to pretend this was something other than a plain war of choice.


    Tyler Durden

    Sat, 01/04/2020 – 23:30

    Tags
    Politics
    War Conflict

  • Very Few US Adults Oppose Marijuana Legalization
    Very Few US Adults Oppose Marijuana Legalization

    Nearly 90 percent of Americans are in favor of legalizing marijuana, according to a September study conducted by Pew Research. As Statista’s Maria Vultaggio notes, at 69 percent of approval, marijuana legalization was most common among 18 to 29-year-olds. At 12 percent, it was least common among Republicans.

    Infographic: Few U.S. Adults Oppose Marijuana Legalization | Statista

    You will find more infographics at Statista

    On January 2, the governor of Kansas said she would likely sign a bill to legalize marijuana. Though Governor Laura Kelly wouldn’t advocate for the bill, she’s not opposed to it.

    “I haven’t really decided what I would do. This is something where what the people want is probably more what I will want on something like that,” Kelly told WIBW.

    “I don’t have a personal ideology regarding it. If the folks want it and the legislature passes it, would I sign it? Probably.”

    Currently, recreational marijuana is legal in Alaska, California, Colorado, Illinois, Massachusetts, Maine, Michigan, Nevada, Oregon, Vermont, Washington and the District of Columbia.


    Tyler Durden

    Sat, 01/04/2020 – 23:00

  • CFR President Says "The World Will Be The Battlefield" After Iran Escalation
    CFR President Says “The World Will Be The Battlefield” After Iran Escalation

    Authored by Paul Joseph Watson via Summit News,

    The President of the Council on Foreign Relations Richard N. Haass says that “the world will be the battlefield” following a dramatic escalation in tensions between the United States and Iran.

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    Fears of a wider war are rising after Iran’s Quds Force General Qasem Soleimani was killed during an airstrike near Baghdad’s airport.

    Haass warned that those who thought any war with Iran would look similar to previous military campaigns were being incredibly naive.

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    “Make no mistake: any war with Iran will not look like the 1990 Gulf war or the 2003 Iraq wars. It will be fought throughout the region w a wide range of tools vs a wide range of civilian, economic, & military targets. The region (and possibly the world) will be the battlefield,” tweeted Haass.

    He went on to assert that developments would lead to Iraqi authorities exerting great pressure on the U.S. to leave their country.

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    “One sure result of the US strike is that the era of US-Iraq cooperation is over. The US diplomatic & mil presence will end b/c Iraq asks us to depart or our presence is just a target or both. The result will be greater Iranian influence, terrorism, and Iraqi infighting,” said Haas.

    Meanwhile, a source described as being in “close contact” with senior security officials in the Trump Administration said that Iran could respond to the killing of Soleimani by launching a massive cyberattack.

    A cyberattack inside the U.S. is “the most likely way that Iran could retaliate stateside,” according to Axios.

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    Tyler Durden

    Sat, 01/04/2020 – 22:30

    Tags
    Politics
    War Conflict

  • Baltimore County Homicides Jump 85% To Record High Amid Spillover In City Murder Crisis 
    Baltimore County Homicides Jump 85% To Record High Amid Spillover In City Murder Crisis 

    The evolution of the Baltimore City murder crisis is now pushing out into Baltimore County, according to a new report from The Baltimore Sun.

    About 50 homicides were recorded in 2019, surpassing the previous high of 42, set during the crack epidemic of the early 1990s, according to FBI statistics. On a yearly change, homicides in the county are up 85%. 

    Baltimore County homicides usually fluctuate in the low 20s. It wasn’t until the 2015 Baltimore City Riots when homicides in the county have jumped ever since. 

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    The Sun also cited police data that recorded 54 nonfatal shootings in the county in 2019 and 56 in 2018.

    There was even a mass stabbing in late September at a luxurious shopping center in Hunt Valley, where four people were randomly stabbed, and police eventually killed the attacker.

    The primary reason for the explosion in homicides and violent crime in the county is due in part to the murder crisis in the city. Violent crime is being pushed out and is now spilling over in the communities five to ten miles from city limits. 

    Baltimore City ended 2019 with record homicides, recorded 348 deaths, and a per capita homicide rate of 57 per 100,000 – one of the highest in the US.

    “Any homicide is completely unacceptable to me and I’m devastated for every single family that lost a loved one to a murder in Baltimore County this past year,” Baltimore County Executive Johnny Olszewski Jr. said Thursday, citing domestic violence and drug-related crimes contributed to the wave of deaths in 2019. 

    Olszewski said to “keep things in context,” the county remains “a safe place to live, work and raise a family.”

    He added, “any loss of life is one too many, and any increase in our rate is deeply concerning.”

    The murder crisis in Baltimore City is spreading, now moving into the county, contributing to record amounts of homicides. 

    The Baltimore Metropolitan Area is descending into chaos – stay away if you value your life. 


    Tyler Durden

    Sat, 01/04/2020 – 22:00

    Tags
    Law Crime

  • China Just Escalated Their Brutal Persecution Of Christians To An Entirely New Level
    China Just Escalated Their Brutal Persecution Of Christians To An Entirely New Level

    Authored by Michael Snyder via The End of The American Dream blog,

    Be very thankful that you don’t live in China.  Approximately one out of every seven people on the entire planet lives in China, and it has become one of the most dystopian societies that the world has ever seen.  Surveillance cameras, government spies and facial recognition scanners are everywhere, and the totalitarian “social credit score” system that is currently being rolled out is an absolute nightmare.  And the Chinese government is not content to simply control how people behave.  They also want to literally control what people believe, and the ongoing crackdown on the Christian faith has been absolutely brutal. 

    Over the past several years, scores of pastors have been arrested, countless underground churches have been shut down, and thousands of Bibles have been burned.  Unfortunately, that wasn’t enough for Chinese officials, and so they have now taken things to an entirely new level.

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    When the communists first came to power in China, it was a very dark time for Christians.  But underground churches started blossoming even in the midst of the persecution, and eventually there were a few decades where the national government more or less tolerated unsanctioned gatherings.  Today, it has been estimated that there are more than 100 million Christians in China, and it is being projected that China may actually have more Christians that any other nation on the planet by the year 2030.

    Needless to say, the communists don’t like any threats to their power, and they see this underground movement as a very serious threat.

    Under the leadership of Chinese President Xi Jinping, the persecution of unofficial churches has steadily escalated.  This year they actually tried to ban Christians from gathering on Christmas, and a series of new regulations has just been introduced that requires “total submission to the Chinese Communist Party at all times”…

    A new mandate entitled “Administrative Measures for Religious Groups” has been approved by the CPC and is comprised of six chapters and 41 articles dealing with the organization, functions, offices, supervision, projects and economic administration of religious communities.

    The new rules also seek to ensure that religious leaders support, promote and implement total submission to the Chinese Communist Party at all times.

    So what does that sort of “submission” look like?

    Well, in some cases officials have required churches to take down pictures of Jesus and replace them with pictures of President Xi Jinping.

    Yes, this is how twisted things have become in China.

    The new regulations also require all churches to “spread the principles and policies of the Chinese Communist Party” in all of their activities…

    According to International Christian Concern, Article 5 of the new ordinance reads that “religious organizations must adhere to the leadership of the Chinese Communist Party, observe the constitution, laws, regulations, ordinances and policies, adhere to the principle of independence and self-government, adhere to the directives on religions in China, implementing the values ​​of socialism …”

    In addition, Article 17 specifies that all religious organizations “must spread the principles and policies of the Chinese Communist Party” in everything they do.

    Any church that does not go along is likely to be raided and shut down at any time.

    For example, Pastor Wang Yi once led one of the most important underground churches in all of China, but his church was raided and he was arrested.

    And now we have learned that he has just been sentenced to nine years in prison…

    Wang Yi, a leader in one of the most well-known Christian congregations in China, has been quietly sentenced to nine years in prison, according to a statement on the website of the Intermediate People’s Court of Chengdu Municipality.

    The sentencing is the latest incident in an ongoing crackdown on organized religion in China. Early Rain Covenant Church, which Wang founded in 2008, attracted about 500 followers and was considered one of the most influential “underground churches” in China, operating independently of the state.

    According to Chinese officials, Pastor Yi received such a harsh sentence for “subverting state power”.

    Of course it isn’t just pastors that are being arrested.  Countless numbers of ordinary Chinese citizens have been swept up during the raids, and many are never seen or heard from again.

    One Chinese Christian woman told the Los Angeles Times what happened to her when she was interrogated…

    Li Chengju glared at her prison interrogator as he pressed her to renounce her Christian church and condemn her pastor.

    Her captor warned she would not be so lucky as the pastor, who was locked in secret detention but at least might get a day in court.

    “Look at you. You sweep the floors at church,” the interrogator said. “You think you’re getting a trial like your pastor? You don’t qualify.”

    The way that the Chinese are treating their citizens is absolutely reprehensible, and unless they completely change course we should not be conducting any trade with them at all.

    Sadly, the “five-year plan” that was launched in 2018 to indoctrinate churches all over China is not even halfway done…

    The government calls its campaign “Sinicization” — a euphemism for turning faith into a tool for indoctrination in Chinese Communist Party ideology. The official five-year plan, issued in 2018, calls for inserting “patriotic education” and “socialist core values” into churches, revising the Bible and using church sermons to enforce party leadership and reject foreign influences.

    The persecution of Christians is likely to get even worse in China, and this comes at a time when Christian persecution is on the rise all over the world.  This is something that many of us have been anticipating because of the times in which we live, but it is still horrifying to actually watch it happen.

    As I close this article, I would like to share a message from Pastor Wang Yi that was posted on Facebook after he was arrested.  May his words inspire all of us to live every moment and to be the people that we were created to be…

    “I hope God uses me, by means of first losing my personal freedom, to tell those who have deprived me of my personal freedom that there is an authority higher than their authority, and that there is a freedom that they cannot restrain, a freedom that fills the church of the crucified and risen Jesus Christ.”

    “Regardless of what crime the government charges me with, whatever filth they fling at me, as long as this charge is related to my faith, my writings, my comments, and my teachings, it is merely a lie and temptation of demons. I categorically deny it. I will serve my sentence, but I will not serve the law. I will be executed, but I will not plead guilty.”

    “Those who lock me up will one day be locked up by angels. Those who interrogate me will finally be questioned and judged by Christ. When I think of this, the Lord fills me with a natural compassion and grief toward those who are attempting to and actively imprisoning me. Pray that the Lord would use me, that he would grant me patience and wisdom, that I might take the gospel to them.”

    “Separate me from my wife and children, ruin my reputation, destroy my life and my family – the authorities are capable of doing all of these things. However, no one in this world can force me to renounce my faith; no one can make me change my life; and no one can raise me from the dead.”

    “Jesus is the Christ, son of the eternal, living God. He died for sinners and rose to life for us. He is my king and the king of the whole earth yesterday, today, and forever. I am his servant, and I am imprisoned because of this. I will resist in meekness those who resist God, and I will joyfully violate all laws that violate God’s laws.”

    – Pastor Wang Yi, “My Declaration of Faithful Disobedience”


    Tyler Durden

    Sat, 01/04/2020 – 21:30

    Tags
    Religion Belief

  • Colin Kaepernick Slams Trump's Racist "Terrorist Attack On Brown People" In Iran, Twitter Users Respond
    Colin Kaepernick Slams Trump’s Racist “Terrorist Attack On Brown People” In Iran, Twitter Users Respond

    Former NFL quarterback and clearly current desperate-for-attention social justice warrior Colin Kaepernick just had his ‘Rose McGowan’ moment, somehow managing to play the race-card against President Trump’s decision to assassinate Qasem Soleimani.

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    In a double-tweet of utter ignorance, the sports-shoe-designer gushed forth the following words on to his Twitter feed…

    “America has always sanctioned and besieged Black and Brown bodies both at home and abroad.

    America militarism is the weapon wielded by American imperialism, to enforce its policing and plundering of the non white world.

    There is nothing new about American terrorist attacks against Black and Brown people for the expansion of American imperialism.”

    It appears the former football player may have taken one too many shots to the head as he seems unaware that the “brown” person he is defending killed many “black and brown” people all over the world.

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    Social media erupted over Kaepernick’s comments (and not in a good, progressive, supportive way)…

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    Given all of that, we wonder how long (actually, if ever), it will be before Kaepernick follows McGowan’s lead and apologizes.

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    Or is Nike happy to support a man who is implicitly supporting a terrorist-funding, American-killing military string-puller… just because he is ‘not an old white man’…

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    Awkward!


    Tyler Durden

    Sat, 01/04/2020 – 21:00

  • Alasdair Macleod's Gold Outlook For 2020
    Alasdair Macleod’s Gold Outlook For 2020

    Authored by Alasdair Macleod via GoldMoney.com,

    This article is an overview of the economic conditions that will drive the gold price in 2020 and beyond. The turn of the credit cycle, the effect on government deficits and how they are to be financed are addressed.

    In the absence of foreign demand for new US Treasuries and of a rise in the savings rate the US budget deficit can only be financed by monetary inflation. This is bound to lead to higher bond yields as the dollar’s falling purchasing power accelerates due to the sheer quantity of new dollars entering circulation. The relationship between rising bond yields and the gold price is also discussed.

    It may turn out that the recent extraordinary events on Comex, with the expansion of open interest failing to suppress the gold price, are an early recognition in some quarters of the US Government’s debt trap.

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    The strains leading to a crisis for fiat currencies are emerging into plain sight.

    Introduction

    In 2019, priced in dollars gold rose 18.3% and silver by 15.1%. Or rather, and this is the more relevant way of putting it, priced in gold the dollar fell 15.5% and in silver 13%.

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    This is because the story of 2019, as it will be in 2020, was of the re-emergence of fiat currency debasement. Particularly in the last quarter, the Fed began aggressively injecting new money into a surprisingly illiquid banking system through repurchase agreements, whereby banks’ reserves at the Fed are credited with cash loaned in return for T-bills and coupon-bearing Treasuries as collateral. Furthermore, the ECB restarted quantitative easing in November, and the Bank of Japan stands ready to ease policy further “if the momentum towards its 2% inflation target comes under threat” (Kuroda – 26 December).

    The Bank of Japan is still buying bonds, but at a pace which is expected to fall beneath redemptions of its existing holdings. Therefore, we enter 2020 with money supply being expanded by two, possibly all three of the major western central banks. Besides liquidity problems, the central bankers’ nightmare is the threat that the global economy will slide into recession, though no one will confess it openly because it would be an admission of policy failure. And policy makers are also terrified that if bankers get wind of a declining economy, they will withdraw loan facilities from businesses and make things much worse.

    Of the latter concern central banks have good cause. A combination of the turn of the credit cycle towards its regular crisis phase and Trump’s tariff war has already hit international trade badly, with exporting economies such as Germany already in recession and important trade indicators, such as the Baltic dry index collapsing. No doubt, President Trump’s most recent announcement that a trade deal with China is ready for signing is driven by an understanding in some quarters of the White House that over trade policy, Trump is turning out to be the turkey who voted for Christmas. But we have heard this story several times before: a forthcoming agreement announced only to be scrapped or suspended at the last moment.

    The subject which will begin to dominate monetary policy in 2020 is who will fund escalating government deficits. At the moment it is on few investors’ radar, but it is bound to dawn on markets that a growing budget deficit in America will be financed almost entirely by monetary inflation, a funding policy equally adopted in other jurisdictions. Furthermore, Christine Lagarde, the new ECB president, has stated her desire for the ECB’s quantitative easing to be extended from government financing to financing environmental projects as well.

    2020 is shaping up to be the year that all pretence of respect for money’s role as a store of value is abandoned in favour of using it as a means of government funding without raising taxes. 2020 will then be the year when currencies begin to be visibly trashed in the hands of their long-suffering users.

    Gold in the context of distorted markets

    At the core of current market distortions is a combination of interest rate suppression and banking regulation. It is unnecessary to belabour the point about interest rates, because minimal and even negative rates have demonstrably failed to stimulate anything other than asset prices into bubble territory. But there is a woeful lack of appreciation about the general direction of monetary policy and where it is headed.

    The stated intention is the opposite of reality, which is not to rescue the economy: while important, from a bureaucrat’s point of view that is not the greatest priority. It is to ensure that governments are never short of funds. Inflationary financing guarantees the government will always be able to spend, and government-licenced banks exist to ensure the government always has access to credit.

    Unbeknown to the public, the government licences the banks to conduct their business in a way which for an unlicensed organisation is legally fraudulent. The banks create credit or through their participation in QE they facilitate the creation of base money out of thin air which is added to their reserves. It transfers wealth from unsuspecting members of the public to the government, crony capitalists, financial speculators and consumers living beyond their means. The government conspires with its macroeconomists to supress the evidence of rising prices by manipulating the inflation statistics. So successful has this scheme of deception been, that by fuelling GDP, monetary debasement is presented as economic growth, with very few in financial mainstream understanding the deceit.

    The government monopoly of issuing money, and through their regulators controlling the expansion of credit, was bound to lead to progressively greater abuse of monetary trust. And now, in this last credit cycle, the consumer who is also the producer has had his income and savings so depleted by continuing monetary debasement that he can no longer generate the taxes to balance his government’s books later in the credit cycle.

    The problem is not new. America has not had a budget surplus since 2001. The last credit cycle in the run up to the Lehman crisis did not deliver a budget surplus, nor has the current cycle. Instead, following the Lehman crisis we saw a marked acceleration of monetary inflation, and Figure 2 shows how dollar fiat money has expanded above its long-term trend since then.

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    In recent years, the Fed’s attempt to return to monetary normality by reducing its balance sheet has failed miserably. After a brief pause, the fiat money quantity has begun to grow at a pace not seen since the immediate aftermath of the Lehman crisis itself and is back in record territory. Figure 1 is updated to 1 November, since when FMQ will have increased even more.

    In order to communicate effectively the background for the relationship between gold and fiat currencies in 2020 it is necessary to put the situation as plainly as possible. We enter the new decade with the highest levels of monetary ignorance imaginable. It is a systemic issue of not realising the emperor has no clothes. Consequently, markets have probably become more distorted than we have ever seen in the recorded history of money and credit, as widespread negative interest rates and negative-yielding bonds attest. In our attempt to divine the future, it leaves us with two problems: assessing when the tension between wishful thinking in financial markets and market reality will crash the system, and the degree of chaos that will ensue.

    The timing is impossible to predict with certainty because we cannot know the future. But, if the characteristics of past credit cycles are a guide, it will be marked with a financial and systemic crisis in one or more large banks. Liquidity strains suggest that event is close, even within months and possibly weeks. If so, banks will be bailed, of that we can be certain. It will require central banks to create yet more money, additional to that required to finance escalating government budget deficits. Monetary chaos promises to be greater than anything seen heretofore, and it will engulf all western welfare-dependent economies and those that trade with them.

    We have established that between keeping governments financed, bailing out banks and perhaps investing in renewable green energy, the issuance of new money in 2020 will in all probability be unprecedented, greater than anything seen so far. It will lead to a feature of the crisis, which may have already started, and that is an increase in borrowing costs forced by markets onto central banks and their governments. The yield on 10-year US Treasuries is already on the rise, as shown in Figure 3.

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    Assuming no significant increase in the rate of savings and despite all attempts to suppress the evidence, the acceleration in the rate of monetary inflation will eventually lead to runaway increases in the general level of prices measured in dollars. As Milton Friedman put it, inflation [of prices] is always and everywhere a monetary phenomenon.

    Through QE, central banks believe they can contain the cost of government funding by setting rates. What they do not seem to realise is that while to a borrower interest is a cost to set against income, to a lender it reflects time-preference, which is the difference between current possession, in this case of cash dollars, and possession at a future date. Unless and until the Fed realises and addresses the time preference problem, the dollar will lose purchasing power. Not only will it be sold in the foreign exchanges, but depositors will move to minimise their balances and creditors their ownership of debt.

    If, as it appears in Figure 3, dollar bond yields are beginning a rising trend, the inexorable pull of time preference is already beginning to apply and further rises in bond yields will imperil government financing. The Congressional Budget Office assumes the average interest rate on debt held by the public will be 2.5% for the next three years, and that net interest in fiscal 2020 will be $390bn, being about 38% of the projected deficit of $1,008bn. Combining the additional consequences for government finances of a recession with higher bond yields than the CBO expects will be disastrous.

    Clearly, in these circumstances the Fed will do everything in its power to stop markets setting the cost of government borrowing. But we have been here before. The similarities between the situation for the dollar today and the deterioration of British government finances in the early to mid-1970s are remarkable. They resulted in multiple funding crises and an eventual bail-out from the IMF. Except today there can be no IMF bail-out for the US and the dollar, because the bailor gets its currency from the bailee.

    Nearly fifty years ago, in the UK gold rose from under £15 per ounce in 1970 to £80 in December 1974. The peak of the credit cycle was at the end of 1971, when the 10-year gilt yield to maturity was 7%. By December 1974, the stock market had crashed, a banking crisis had followed, price inflation was well into double figures and the 10-year gilt yield to maturity had risen to over 16%.

    History rhymes, as they say. But for historians the parallels between the outlook for the dollar and US Treasury funding costs at the beginning of 2020, and what transpired for the British economy following the Barbour boom of 1970-71 are too close to ignore. It is the same background for the relationship between gold and fiat currencies for 2020 and the few years that follow.

    Gold and rising interest rates

    Received investment wisdom is that rising interest rates are bad for the gold price, because gold has no yield. Yet experience repeatedly contradicts it. Anyone who remembers investing in UK gilts at a 7% yield in December 1971 only to see prices collapse to a yield of over 16%, while gold rose from under £15 to £80 to the ounce over the three years following should attest otherwise.

    Part of the error is to believe that gold has no yield. This is only true of gold held as cash and for non-monetary usage. As money, it is loaned and borrowed, just like any other form of money. Monetary gold has its own time preference, as do government currencies. In the absence of state intervention, time preferences for gold and government currencies are set by their respective users, bearing in mind the characteristics special to each. It is not a subject for simple arbitrage, selling gold and buying government money to gain the interest differential, because the spread reflects important differences which cannot be ignored. It is like shorting Swiss francs and buying dollars in the belief there is no currency risk.

    The principal variable between the time preferences of gold and a government currency is the difference between an established form of money derived from the collective preferences of its users, for which there is no issuer risk, and state-issued currency which becomes an instrument of funding by means of its debasement.

    The time preference of gold will obviously vary depending on lending risk, which is in addition to an originary rate, but it is considerably more stable than the time preference of a fiat currency. Gold’s interest rate stability is illustrated in Figure 4, which covers the period of the gold standard from the Bank Charter Act of 1844 to before the First World War, during which time the gold standard was properly implemented. With the exception of uncontrolled bank credit, sterling operated as a gold substitute.

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    Admittedly, due to problems created by the cycle of bank credit, these year-end values conceal some significant fluctuations, such as at the time of the Overend Gurney collapse in 1866 when borrowing rates spiked to 10%. The depression following the Barings crisis of 1890 stalled credit demand which is evident from the chart. However, wholesale borrowing rates, which were effectively the cost of borrowing in gold, were otherwise remarkably stable, varying between 2-3½%. Some of this variation can be ascribed to changing perceptions of general borrower risk and some to changes in industrial investment demand, related to the cycle of bank credit.

    Compare this with dollar interest rates since 1971, when the dollar had suspended the remaining fig-leaf of gold backing, which is shown in Figure 5 for the decade following.

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    In February 1972 the Fed Funds rate was 3.29%, rising eventually to over 19% in January 1981. At the same time gold rose from $46 to a high of $843 at the morning fix on 21 January 1980. Taking gold’s originary interest rate as approximately 2% it required a 17% interest rate penalty to dissuade people from hoarding gold and to hold onto dollars instead.

    In 1971, US Government debt stood at 35% of GDP and in 1981 it stood at 31%. The US Government ran a budget surplus over the decade sufficient to absorb the rising interest cost on its T-bill obligations and any new Treasury funding. America enters 2020 with a debt to GDP ratio of over 100%. Higher interest rates are therefore not a policy option and the US Government, and the dollar, are ensnared in a debt trap from which the dollar is unlikely to recover.

    The seeds of the dollar’s destruction were sown over fifty years ago, when the London gold pool was formed, whereby central banks committed to help the US maintain the price at $35, being forced to do so because the US could no longer supress the gold price on its own. And with good reason: Figure 6 shows how the last fifty years have eroded the purchasing power of the four major currencies since the gold pool failed.

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    Over the last fifty years, the yen has lost over 92%, the dollar 97.6%, the euro (and its earlier components 98.2% and sterling the most at 98.7%. And now we are about to embark on the greatest increase of global monetary inflation ever seen.

    The market for physical gold

    In recent years, demand for physical gold has been strong. Chinese and Indian private sector buyers have to date respectively accumulated an estimated 17,000 tonnes (based on deliveries from Shanghai Gold Exchange vaults) and about 24,000 tonnes (according to WGC Director Somasundaram PR quoted in India’s Financial Express last May).

    It is generally thought that higher prices for gold will deter future demand from these sources, with the vast bulk of it being categorised as simply jewellery. But this is a western view based on a belief in objective values for government currencies and subjective prices for gold. It ignores the fact that for Asians, it is gold that has the objective value. In Asia gold jewellery is acquired as a store of value to avoid the depreciation of government currency, hoarded as a central component of a family’s long-term wealth accumulation.

    Therefore, there is no certainty higher prices will compromise Asian demand. Indeed, demand has not been undermined in India with the price rising from R300 to the ounce to over R100,000 today since the London gold pool failed, and that’s despite all the government disincentives and even bans from buying gold.

    Additionally, since 2008 central banks have accumulated over 4,400 tonnes to increase their official reserves to 34,500 tonnes. The central banks most active in the gold market are Asian, and increasingly the East and Central Europeans.

    There are two threads to this development. First there is a geopolitical element, with Russia replacing reserve dollars for gold, and China having deliberately moved to control global physical delivery markets. And second, there is evidence of concern amongst the Europeans that the dollar’s role as the reserve currency is either being compromised or no longer fit for a changed world. Furthermore, the rising power of Asia’s two hegemons continues to drive over two-thirds of the world’s population away from the dollar towards gold.

    Goldmoney estimates there are roughly 180,000 tonnes of gold above ground, much of which cannot be categorised as monetary: monetary not as defined for the purposes of customs reporting, but in the wider sense to include all bars, coins and pure gold jewellery accumulated for its long-term wealth benefits through good and bad times. Annual mine production adds 3,000-3,500 tonnes, giving a stock to flow ratio of over 50 times. Put another way, the annual increase in the gold quantity is similar to the growth in the world’s population, imparting great stability as a medium of exchange.

    These qualities stand in contrast to the increasingly certain acceleration of fiat currency debasement over the next few years. Anyone prepared to stand back from the financial coalface can easily see where the relationship between gold and fiat currencies is going. Most of the world’s population is moving away from the established fiat regime towards gold as a store of value, their own fiat currencies lacking sufficient credibility to act as a dollar alternative. And financial markets immersed in the fiat regime have very little physical gold in possession. Instead, where it is now perceived that there is a risk of missing out on a rise in the gold price, investors have begun accumulating in greater quantities the paper alternatives to physical gold: ETFs, futures, options, forward contracts and mining shares.

    Paper markets

    From the US Government’s point of view, gold as a rival to the dollar must be quashed, and the primary purpose of futures options and forwards is to expand artificial supply to keep the price from rising. In a wider context, the ability to print synthetic commodities out of thin air is a means of suppressing prices generally and we must not be distracted by claims that derivatives improve liquidity: they only improve liquidity at lower prices.

    When the dollar price of gold found a major turning point on 17 December 2015, open interest on Comex stood at 393,000 contacts. The year-end figure today is nearly double that at 786,422 contracts, representing an increase of paper supply equivalent to 1,224 tonnes. But that is not all. Not only are there other regulated derivative exchanges with gold contracts, but also there are unregulated over the counter markets. According to the Bank for International Settlements from end-2015 unregulated OTC contracts (principally London forward contracts) expanded by the equivalent of 2,450 tonnes by last June, taken at contemporary prices. And we must not forget the unknown quantity of bank liabilities to customers’ unallocated accounts which probably involve an additional few thousand tonnes.

    In recent months, the paper suppression regime has stepped up a gear, evidenced by Comex’s open interest rising. This is illustrated in Figure 7.

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    There are two notable features in the chart. First, the rising gold price has seen increasing paper supply, which we would expect from a market designed to keep a lid on prices. Secondly instead of declining with the gold price, open interest continued to rise following the price peak in early September while the gold price declined by about $100. This tells us that the price suppression scheme has run into trouble, with large buyers taking the opportunity to increase their positions at lower prices.

    In the past, bullion banks have been able to put a lid on prices by creating Comex contracts out of thin air. The recent expansion of open interest has failed to achieve this objective, and it is worth noting that the quantity of gold in Comex vaults eligible for delivery and pledged is only 2% of the 2,446-tonne short position. In London, there are only 3,052 tonnes in LBMA vaults (excluding the Bank of England), which includes an unknown quantity of ETF and custodial gold. Physical liquidity for the forward market in London is therefore likely to be very small relative to forward deliveries. And of course, the bullion banks in London and elsewhere do not have the metal to cover their obligations to unallocated account holders, which is an additional consideration.

    Clearly, there is not the gold available in the system to legitimise derivative paper. It now appears that paper gold markets could be drifting into systemic difficulties with bullion banks squeezed by a rising gold price, short positions and unallocated accounts.

    There are mechanisms to counter these systemic risks, such as the ability to declare force majeure on Comex, and standard unallocated account contracts which permit a bullion bank to deliver cash equivalents to bullion obligations. But the triggering of any such escape from physical gold obligations could exacerbate a buying panic, driving prices even higher. It leads to the conclusion that any rescue of the bullion market system is destined to fail.

    A two-step future for the gold price

    It has been evident for some time that the world of fiat currencies has been drifting into ever greater difficulties of far greater magnitude than can be contained by spinning a few thousand tonnes of gold back and forth on Comex and in London. That appears to be the lesson to be drawn from the inability of a massive increase in open interest on Comex to contain a rising gold price.

    It will take a substantial upward shift in the gold price to appraise western financial markets of this reality. In combination with systemic strains increasing, a gold price of over $2,000 may do the trick. Professional investors will have found themselves wrongfooted; underinvested in ETFs, gold mines and regulated derivatives, in which case their gold demand is likely to drive one or more bullion houses into considerable difficulties. We might call this the first step in a two-step monetary future.

    The extent to which gold prices rise could be substantial, but assuming the immediate crisis itself passes, banks having been bailed in or out, and QE accelerated in an attempt to put a lid on government bond yields, then the gold price might be deemed to have risen too far, and due for a correction. But then there will be the prospect of an accelerating loss of purchasing power for fiat currencies as a result of the monetary inflation, and that will drive the second step as investors realise that what they are seeing is not a rising gold price but a fiat currency collapse.

    The high levels of government debt today in the three major jurisdictions appear to almost guarantee this outcome. The amounts involved are so large that today’s paper gold suppression scheme is likely to be too small in comparison and cannot stop it happening. The effect on currency purchasing powers will then be beyond question. Monetary authorities will be clueless in their response, because they have all bought into a form of economics that puts what will happen beyond their understanding.

    As noted above, the path to a final crisis for fiat currencies might have already started, with the failure by the establishment to suppress the gold price through the creation of an extra 100,000 Comex contracts. If not, then any success by the monetary authorities to reassert control is likely to be temporary.

    Perhaps we are already beginning to see the fiat currency system beginning to unravel, in which case those that insist gold is not money will find themselves impoverished.


    Tyler Durden

    Sat, 01/04/2020 – 20:30

    Tags
    Business Finance

  • It Would Have Been 'Utterly Irrational' For Trump To Notify Democrats Of Soleimani Strike: Dobbs
    It Would Have Been ‘Utterly Irrational’ For Trump To Notify Democrats Of Soleimani Strike: Dobbs

    President Trump would have been ‘utterly irrational’ to have shared plans to strike Iranian Gen. Qasem Soleimani, the country’s second-most powerful person, according to Fox Business Network host Lou Dobbs.

    The Friday comments come amid outrage from Congressional Democrats, including Senate Minority Leader Chuck Schumer (D-NY) and House Speaker Nancy Pelosi (D-CA).

    “I think Chuck Schumer was born complaining,” Dobbs told White House press secretary Stephanie Grisham on “Lou Dobbs Tonight,”…

    …adding “And I wouldn’t expect any quick change in his behavior. There is also, I think, a good case to be built that it would be utterly irrational of the Trump Administration to brief the very people who are trying to unseat him, remove him from power, to overthrow his presidency and to have done everything in their power to do so.”

    Watch (via the Daily Caller):

    Hilariously, on Saturday the White House delivered Congress notification of the Soleimani strike two days later.

    The notification, required by law within 48 hours of introducing American forces into armed conflict or a situation that could lead to war, has to be signed and then sent to Congress, according to the officials with knowledge of the plan.

    Lawmakers expected the document to publicly lay out the White House’s legal justification for the strike on General Suleimani, Iran’s top security commander, who officials have said has been behind hundreds of American deaths over the years. But the notification first sent to Congress late Saturday afternoon only contained classified information, according to a senior congressional aide, likely detailing the intelligence that led to the action. It is unclear whether the White House will send a separate, unclassified document. –NYT

    In response, Pelosi said in a Saturday evening statement that the notification “raises more questions than it answers,” such as “serious and urgent questions about the timing, manner and justification of the administration’s decision to engage in hostilities against Iran.”

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    Tyler Durden

    Sat, 01/04/2020 – 20:00

    Tags
    Politics

  • Retaliation Begins: Multiple Mortar Attacks On US Presence In Iraq, Hezbollah Warns Security Forces "Stay Away"
    Retaliation Begins: Multiple Mortar Attacks On US Presence In Iraq, Hezbollah Warns Security Forces “Stay Away”

    Update: There are unconfirmed reports that US aircraft have attacked Iranian positions near the eastern Syrian city of Al-Bukamal.

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    Meanwhile, a US surveillance drone was reportedly shot down by Iran’s Popular Mobilization Forces (PMF) in Anbar, however there has been no official confirmation.

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    ***

    Summary:

    • Multiple ‘Katyusha’ unguided missiles/mortars fired into two regions near Baghdad.

    • Green Zone neighborhood in Baghdad, comes under mortar shell attack: 5 ppl wounded.

    • Balad airbase (hosts US troops) near Baghdad hit by missiles: 3 Iraqi soldiers wounded.

    • Explosion heard at Al-Kindi base in Mosul (which houses US troops): no details on injuries yet

    • Hezbollah warns Iraqi Security Forces to stay away from US bases.

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    *  *  *

    As 1000s march in the streets of Baghdad to moutn the death of Soleimani, Al-Arabiya (and other local news sources) report rockets have landed in the heavily fortified Green Zone in Baghdad, where the US Embassy (among other things) is located.

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    Witnesses told Reuters that an explosion was heard in the Iraqi capital, Baghdad

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    Sky News Arabia reports that the missile landed in the Green Zone in Baghdad and closed the entrance to the road leading to the American embassy.

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    An unguided ‘Katyusha’ rocket was reportedly launched…

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    Dozens of US Apache helicopters are now seen overhead…

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    President Rouhani reportedly threatened a “lightning strike” against America…

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    Additionally, there are now reports that multiple rockets have struck Balad Airbase, located just north of Baghdad, that hosts US troops…

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    A third mortar attack is reportedly underway at the US military base at Al-Kindi in Mosul…

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    Meanwhile, Iraqi police have opened fire at armed PMU militiamen during the funeral procession.

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    Tyler Durden

    Sat, 01/04/2020 – 19:59

    Tags
    War Conflict

  • Ruling Class Propaganda: Only Government-Approved Apps Allowed
    Ruling Class Propaganda: Only Government-Approved Apps Allowed

    Authored by Mac Slavo via SHTFplan.com,

    The United States Army has decided that soldiers can no longer access certain apps. They have banned soldiers from using TikTok over alleged Chinese “cyber threat”, but in reality, it’s just an app the U.S. government can’t control.

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    The U.S. Army is signaling that its soldiers should stick to platforms that march exclusively to Washington’s tune and do not deviate from the official narrative and government-approved propaganda.  An army spokeswoman confirmed on Monday that the Chinese app “is considered a cyber threat“ and will no longer be allowed on government phones and mobile devices. The military had previously used the popular social media platform to reach out to potential recruits, according to a report by RT. 

    The decision comes less than two weeks after the U.S. Navy banned the Chinese app from all government-issued mobile devices – citing the same alleged “cybersecurity threat.”  Anyone who’s been paying attention, however, should know that TikTok poses no cybersecurity threat.  It poses a threat to the American power structure that the establishment ruling class is desperately attempting to hold on to.

    The Pentagon issued a Cyber Awareness Message earlier in December, warming that using TikTok could come with “potential security risks.“ The app had been targeted by two US senators, Tom Cotton (R-Arkansas), and Chuck Schumer (D-New York), who requested in October that US intelligence agencies probe the app. –RT

    TikTok parent company ByteDance has strongly denied any sinister motives, even as competing apps, Twitter, YouTube, and Facebook have been proven to collude openly with government agencies. In September, executives from all the major U.S. social media platforms met with U.S.S.A government officials to discuss how to “secure“ the 2020 elections and crackdown on the spread of “polarizing“ content.

    That can be translated to “the government wants social media and tech giants to remove any content that does not support their ruling class power structure.”


    Tyler Durden

    Sat, 01/04/2020 – 19:30

    Tags
    Politics
    Technology Internet

  • Hong Kong Activates "Serious Response" As Chinese Mystery Illness Prompts Hospital Lockdown
    Hong Kong Activates “Serious Response” As Chinese Mystery Illness Prompts Hospital Lockdown

    Authorities in Hong Kong have activated a recently created “serious response” threat level Saturday as a mysterious SARS-like respiratory illness begins to spread throughout central China, according to AP.

    While just 44 people have been admitted to the hospital with the unidentified virus – eleven of them in serious condition, authorities in Wuhan, China have put 121 people under observation who have been in close contact with the infected. Five cases, meanwhile, have been reported in Shanghai – around 570 miles north of Hong Kong.

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    A Wuhan government official told SCMP that his wife, a nurse in the infectious disease unit at the Central Hospital, has been unable to go home for the past several days because her ward has been on “lockdown.”

    “My kids and I can still call her on her mobile,” he said, adding “[But] we are very worried for her, although she said all is fine.”

    Five possible cases have been reported of a viral pneumonia that has also infected at least 44 people in Wuhan, an inland city west of Shanghai, about 900 kilometers (570 miles) north of Hong Kong.

    The outbreak, which emerged last month, has revived memories of the 2002-2003 SARS epidemic that started in southern China and killed more than 700 people in the mainland, Hong Kong and elsewhere. –AP

    The most common symptom of the new disease is fever, shortness of breath and lung infections. Method of transmission / infection is unknown. Investigations have ruled out bird flu and the common flu, as well as adenovirus infection and other common respiratory diseases. Further laboratory tests are ongoing according to the Wuhan Municipal Health Commission.

    Hong Kong’s ‘serious response’ level is the second highest in a newly-launched three-tier system unveiled Saturday, designed to respond to infectious diseases of unknown origin.

    On Friday, the city’s health department activated a thermal imaging system at Hong Kong’s airport to check the body temperature of arriving passengers, while the staff at the West Kowloon high-speed rail station which connects Hong Kong and the mainland have been ordered to undergo temperature checks.

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    Wuhan Medical Treatment Centre, where some patients are reportedly in quarantine. Photo: Weibo  (via SCMP)

    During a Friday visit to the train station, city leader Carrie Lam urged any travelers with respiratory systems to don surgical masks and seek immediate medical attention – telling doctors where they’ve been.

    According to Oxford University visiting professor to the University of Hong Kong, Dr. Emily Chan Ying-yang, the sudden rise in cases in Wuhan is “not alarming,” but raises concerns that it may be a new strain.

    “If it were Sars [Severe Acute Respiratory Syndrome], we are experienced in managing it,” she said. “But if it is a new strain, then we should pay attention.“

    “The scariest thing with Sars is its fatality rate, and that young people died. We don’t know whether the serious cases in Wuhan are young or old people – that deserves attention.”

    According to SCMP, Ying-yang says it’s important for authorities to be transparent with people, as large numbers of people will be traveling throughout China for the Lunar New Year in late January.

    Professor Jiang Rongmeng, of Ditan Hospital in Beijing, one of China’s top centres for treating infectious diseases, said the rise in infections was probably a consequence of active detection and reporting of unexplained pneumonia cases.

    “No apparent human-to-human transmission has been detected so far, otherwise there would have been a community outbreak with more infections,” he said. –SCMP

    The outbreak was first reported among stallholders at the city’s Hunan Seafood Wholesale Market – which also sells live animals including birds and rabbits.


    Tyler Durden

    Sat, 01/04/2020 – 19:00

  • "2020 Recession Is Not Off The Table" – Positive Jobs Report Doesn't Tell The Whole Story
    “2020 Recession Is Not Off The Table” – Positive Jobs Report Doesn’t Tell The Whole Story

    Via Real Vision,

    Despite a positive jobs report in December, the growth rate cycle slowdown will continue into early 2020 and include a weaker performance out of the jobs market, Lakshman Achuthan, COO and co-founder of ECRI told Real Vision’s The Interview.

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    Achuthan said the unemployment rate may have reached a record low at 3.5%, but in the construction sector – a key sector of the economy – unemployment is up almost 2%. And manufacturing has seen almost a 1 percentage point rise in the unemployment rate.

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    He said these are among the indicators that the cycle is still moving to the downside, and said while he doesn’t think a recession is imminent, it’s also not an impossibility.

    “I think a recession is not off the table at all in 2020, and so there is no green light on that score,” he said. “We do have green lights in Europe, Asia ex Japan, maybe even global industrial growth getting its legs. But that does not mean the US can’t still cycle down between now and whenever it catches something on those cycles.”

    Achuthan said he sees a few upticks in long leaders and even in a few shorter leaders like financial services, but in order for it to be an objective upturn, it has to be pronounced in those leading indicators.

    “It has to be pronounced. It has to persist. And it has to be pervasive,” he said.

    “It has to be the majority of the drivers contributing to the rise. As of today, there’s no upturn. Until you see the three P’s to the upside, we just don’t have that.”

    Here’s the full interview of Achuthan and Real Vision’s Ed Harrison discussing ECRI’s indicators and what they are saying about the business cycle. 


    Tyler Durden

    Sat, 01/04/2020 – 18:30

    Tags
    Labor
    Business Finance

  • "No More Threats" – Trump Warns Iran "52 Targets Will Be Hit Very Fast & Hard"
    “No More Threats” – Trump Warns Iran “52 Targets Will Be Hit Very Fast & Hard”

    Following today’s mortar attacks, and bellicosity from various Iranian (and Iran-backed) leaders, President Trump has responded in words (for now), warning Iran in three short words: “no more threats!”

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    In three short tweets, Trump explained he is done being threatened…

    “Iran is talking very boldly about targeting certain USA assets as revenge for our ridding the world of their terrorist leader”

    Then reminded his followers just exactly what Soleimani had done…

    “[Soleimani] had just killed an American, & badly wounded many others, not to mention all of the people he had killed over his lifetime, including recently hundreds of Iranian protesters.

    He was already attacking our Embassy, and preparing for additional hits in other locations. Iran has been nothing but problems for many years.”

    Then came the warning:

    “Let this serve as a WARNING that if Iran strikes any Americans, or American assets, we have targeted 52 Iranian sites (representing the 52 American hostages taken by Iran many years ago), some at a very high level & important to Iran &  the Iranian culture, and those targets, and Iran itself, WILL BE HIT VERY FAST AND VERY HARD. The USA wants no more threats!“

    Not quite as aggressive as the “fire and fury” tweet directed at North Korea, but with the red flag of jihad flying in Iran, we suspect they get the message from the US president.

    Of course, as Politico’s Rym Momtaz explained earlier, no one knows for sure what happens next, even those who will decide some of the next steps.

    The Iranian regime is not suicidal, it is strategic, calculating (even if it miscalculates sometimes), so likelihood of an all-out direct US-Iran war is low.

    Khamenei promised response, it must be strong enough to save face internally, for a regime already strained + facing popular dissent, and also be calibrated to avoid provoking a US response inside Iran.

    Iran’s response will show whether deterrence restored.

    The myth of invincibility that Iran built around Soleimani was a huge recruitment tool, it may also now turn out to be a double-edged sword.

    How does its most valiant warrior, its most effective US challenger, get picked off so precisely by the US?

    Concern for US military, diplo personnel, and citizens, in the region is legit. But allowing it to dictate policy plays into Iran’s hands which weaponises Western sensitivity to human loss, and war weariness, to further destabilise the region unchecked.

    There are many so-called anti-imperialists who always criticise Western intervention but justify Iranian/Russian intervention. Iran is not a legit actor in Iraq/Syria/Leb/Yemen. Its crimes there are no less reprehensible than those by the US or colonialists.

    Iran is set to announce its next violations of the JCPOA in next few days. That’s another thing to look out for, other than a military retaliation, in wake of the Soleimani killing. Will it escalate to the point of affecting break-out time or not?

    Trump’s warning follows Hezbollah Secretary General Sayyed Hasan Nasrallah’s comments stressing that avenging Soleimani and the other martyrs is a duty of all resistance mujahidin around the world.


    Tyler Durden

    Sat, 01/04/2020 – 18:15

    Tags
    Politics

  • Selective Service Website Crashes Amid WWIII Draft Fears
    Selective Service Website Crashes Amid WWIII Draft Fears

    President Trump’s drone strike that killed a top Iranian commander at Baghdad International Airport on Friday has sparked concern among many Americans that the government could reinstate the draft ahead of a possible military conflict with Iran.

    The Selective Service System website crashed on Friday after a surge in traffic was seen following the killing of Iranian General Qasem Suleimani.

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    Google searches for “military draft age,” “iran,” “world war 3,” “us draft,” “draft exemption,” “draft requirements,” and “is there a ww3” spiked around 10 am est. Friday and have been elevated ever since.

    Hashtags such as #WWIII, #WorldWarThree, #WW3Memes and #WorldWarThreeDraft have been trending on Twitter in the last 24-hours.

    The US sending upwards of 3,500 additional troops to military bases that surround Iran has also increased the hysteria – as many Americans now believe a war with Iran could be imminent.

    Bloomberg noted that the Selective Service System website went down on Friday after high traffic volumes were seen. The agency said, “Due to the spread of misinformation, our website is experiencing high traffic volumes at this time. If you are attempting to register or verify registration, please check back later today as we are working to resolve this issue. We appreciate your patience.”

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    In a separate tweet, the Selective Service System said, “In the event that a national emergency necessitates a draft, Congress and the President would need to pass official legislation to authorize a draft.”

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    The draft was abolished in 1973. However, all men ages 12 to 25 are required to provide their current information to the Selective Service System.

    A return of the draft is unlikely at the moment. But if tensions continue to escalate in the Middle East between the US and Iran, then it would be up to Congress and the President to reinstate the draft ahead of the next round of America’s forever wars.

     


    Tyler Durden

    Sat, 01/04/2020 – 18:00

    Tags
    Politics

  • Pat Buchanan: Our Real Existential Crisis – Extinction
    Pat Buchanan: Our Real Existential Crisis – Extinction

    Authored by Pat Buchanan via Buchanan.org,

    If Western elites were asked to name the greatest crisis facing mankind, climate change would win in a walk.

    Thus did Time magazine pass over every world leader to name a Swedish teenage climate activist, Greta Thunberg, its person of the year.

    On New Year’s Day, the headline over yet another story in The Washington Post admonished us anew: “A Lost Decade for Climate Action: We Can’t Afford A Repeat, Scientists Warn.”

    “By the final year of the decade,” said the Post, “the planet had surpassed its 2010 temperature record five times.

    “Hurricanes devastated New Jersey and Puerto Rico, and floods damaged the Midwest and Bangladesh. Southern Africa was gripped by a deadly drought. Australia and the Amazon are ablaze.”

    On it went, echoing the endless reports on the perils of climate change to the planet we all inhabit.

    Yet, from the inaction of the carbon-emitting countries like India, China, Russia and the USA, the gravity with which Western elites view the crisis is not shared by the peoples for whom they profess to speak.

    For many First World countries, there are more compelling concerns.

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    High among them is population decline, and, if birth rates do not rise, the near-extinction of many Western peoples by this century’s end.

    Consider…

    The number of births in Japan fell in 2019 to a level unseen since 1874, around 900,000. But there were 1.4 million deaths for a net loss of 512,000 Japanese. An even larger loss in Japan’s population is expected this year.

    Japan’s population has been shrinking since 2007, when deaths first exceeded births by 18,000. And with 28% of its population over 65, and fewer births every passing year, Japan is aging, shrinking and dying — with no respite in sight.

    Across Japan, writes The New York Times:

    “Whole villages are vanishing as young people choose not to have children or move to urban areas … The Government estimates that the population could shrink by about 16 million people — or nearly 13 percent — over the next 25 years.”

    South Korea has an even lower birth rate, and its population is expected to start diminishing this year.

    But it is Eastern Europe where the population crisis is most advanced.

    At the end of the Cold War, Bulgaria had 9 million people. By 2017, that had fallen to 7.1 million. In 2050, Bulgaria’s population is estimated at 5.4 million — a loss of 40% to death and migration since Bulgaria won its freedom from the Soviet Empire.

    By 2050, Ukraine and Poland are each projected to lose another 6 million people, and Hungary will lose 1.5 million.

    Lithuania and Latvia have seen serious population losses since the end of the Cold War and are in the front rank of European nations losing people at the fastest rate.

    U.N. demographers project Russia’s population may fall from 145 million today to 121 million by 2050. Such losses rival those that Russia suffered under Lenin, Stalin and World War II.

    The Far East is home to some 6 million Russians who dwell on that vast tract that is so full of natural resources like timber, oil and gas.

    “The population continues to decrease almost everywhere in the Far East,” lamented President Vladimir Putin at an investment conference in Vladivostok:

    “The inflow is increasing, but it does not cover the number of people leaving the region.”

    In the Far East, Siberia and the Lake Baikal region, investors and workers from China are appearing in growing numbers.

    The tribes of Europe, the peoples of almost every country of the Old Continent, are visibly aging, shrinking and dying. The population crisis of Europe is “existential,” says Croatian Prime Minister Andrej Plenkovic.

    Since this writer published “The Death of the West,” nothing has happened to alter my conclusion as to where the West was destined:

    “The Death of the West is not a prediction of what is going to happen. It is a depiction of what is happening now. First World nations are dying. They face a mortal crisis, not because of something happening in the Third World, but because of what is not happening at home and in the homes of the First World. Western fertility rates have been falling for decades. Outside of Muslim Albania, no European nation is producing enough babies to replace its population. … In a score of countries the old are already dying off faster than the young are being born. … There is no sign of a turnaround. Now the absolute numbers of Europeans have begun to fall.”

    We are talking here about what historians, a century hence, will call the Lost Tribes of Europe. And if a people has ceased to replace itself, and the national family is dying out, it is difficult to generate alarm over the slow sinking of the Maldives into the sea, the melting of the polar ice caps, or the fact that Greenland is getting greener every year.


    Tyler Durden

    Sat, 01/04/2020 – 17:30

    Tags
    Environment

  • Just Two Companies Accounted For Nearly 20% Of The Market's Entire 2019 Return
    Just Two Companies Accounted For Nearly 20% Of The Market’s Entire 2019 Return

    Two weeks ago, when looking back at 2019, Morgan Stanley concluded that the observed market action was indicative of one of the most bizarre years ever, because while the S&P ended up returning a whopping 29% in 2019, just shy of 2013’s 29.3% and the second best year for the market since 1997, earnings actually dropped, which means that all the market upside came from multiple expansion. There was another bizarre aspect to 2019: it was a year when despite the blockbuster overall return of the S&P, “bullish” strategies actually underperformed.

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    Now, in his year in review weekly, Goldman’s David Kostin makes some observations of his own, and reaches a similar conclusion to that from Morgan Stanley.

    For one the S&P 500, which soared started in early October, just around the time the Fed launched QE4, reached 35 new all-time highs last year, with 20 of those days coming in the last two months. US equities also bested other major global markets, outperforming Japan (15%), Europe (23%), and emerging markets (15%).

    So far so good, yet what is more notable is how the market reached its impressive returns, and here Goldman confirms what we already knew, namely that valuation expansion drove nearly all of the S&P 500 return in 2019. To wit, according to Goldman earnings growth explains just 8% of the S&P 500 return last year (others disagree, and Morgan Stanley for example observes that earnings were actually negative in 2019 meaning earnings growth subtracted from total returns). Instead, as Kostin notes, “three 25 bp Fed cuts helped lift company valuations. The S&P 500 forward P/E expanded from 14x to 19x and accounted for 92% of the index price gain.”

    But while it was largely known that the entire market gain was on the back of multiple expansion (and record buybacks), where things get far more interesting is the sectoral composition of the upside: here as Goldman notes, just one sector, Information Technology, posted a 50% total return and accounted for 32% of the S&P 500 index return. Financials contributed 14% to the index return, followed by Communication Services at 11%.

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    As a reminder, we also know who the source of stock buying was for most of 2019: companies themselves, which in 2018 and 2019 unleashed a record buyback spree, with IT, until recently sporting the most debt flexibility, buying back the most stock of any market sector funded with a tidal wave of debt issuance.

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    Away from tech, while all sectors posted positive double-digit returns, Energy fared the worst (+12%) due to weak earnings and volatile oil prices, although spot Brent rose by 23% during the year.

    But what is most remarkable is just how skewed the market has become in representing the moves of just a handful of what Goldman calls large-cap “superstar” firms, which powered most of the S&P 500 return. While three Semiconductor companies – AMD (+148%), LCRX (+119%), and KLAC (+104%) – were the best-performing S&P 500 stocks, “superstar” firms AAPL (+89%) and MSFT (+58%) were the top two contributors to the S&P 500 index gain. In fact, combined the two firms accounted for nearly a fifth of the entire S&P 500 return, or 17% to be exact, in 2019. Extending that list, just the top 10 companies contributed over 10%, or exactly a third, of the S&P’s total 31% return.

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    Not all superstars soared: regulatory scrutiny and slowing growth weighed on other superstar firms, although it’s funny that Goldman says that GOOGL, which was up +28% and AMZN, up+23%, “lagged the index.” Because up 28% is just so disappointing. At the opposite end of the spectrum, ABIOMED (-48%), Macy’s (-38%), and Occidental Petroleum (-28%) were the worst performing S&P 500 constituents last year.

    What else? Well, as Kostin writes, “the 10th anniversary of the bull market has drawn parallels to the late 1990s.”
    Indeed, as discussed extensively here previously, in 1998, the Fed delivered 75 bp of “insurance cuts” and the S&P 500 rallied by 27%. And just like now, valuations exploded – from 18x to 23x – and accounted for nearly all of the index return. Furthermore, amid global economic turmoil – also just like now – investors flocked to US stocks. Back then, Russia defaulted on its sovereign debt and the hedge fund LTCM collapsed, as Treasury yields fell from 5.8% to 4.7%. And yes, just like now, Info Tech was also the best-performing sector (+77%) and accounted for 35% of index return.

    Looking ahead, Goldman writes that “given the parallels between 1998 and 2019, many investors are looking to history as a potential guide for the future.” Specifically, in 1999, the S&P 500 rallied by 20%, a number which Goldman thinks may actually be conservative because unlike late 1990’s, the current forward P/E of 19x is well below the 23x P/E at the start of 1999. Relative to interest rates, the current earnings yield of 5.3% is 341 bp above the 10-year yield of 1.9%. At the start of 1999, the earnings yield of 4.4% was 26 bp below the Treasury yield of 4.7%.

    In short, Goldman expects at least another year of superstar returns before the late 1990s comp ends… and everyone remembers what happened in 2000.

    What may catalyze the second tech bubble bursting? Perhaps it will be the key political event of 2020 – the November presidential elections. As Goldman concludes, “looking ahead to 2020, politics will be the key focus for investors.”

    Following the recent rally, we expect S&P 500 will hover around 3250 until November. Prediction markets currently imply that a divided government is the most likely election outcome. Democrats are expected to maintain control of the House (71%), and are slight favorites to win the presidency (52% probability), but appear unlikely to regain control of the Senate (30% likelihood). A divided government would limit the prospect that legislation is passed reversing the 2017 corporate tax cut.” 

    And while Goldman expects the election to resolve policy uncertainty and lift S&P 500 by 5% to 3400 by year end, should there be a surprise and Democrats succeed in sweeping Washington, and eventually reversing the Trump tax cuts, under a higher corporate tax rate regime, 2021 estimated EPS would equal $162 (v. Goldman’s baseline estimate of $183), the P/E would compress to 16x, and S&P 500 would end at 2600.

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    Of course, now that Trump knows just how to manipulate the market, stocks may soon explode higher as the president dangles “optimism” over a Phase 2 deal, which may potentially push the S&P as high as 3,600 – 4,000 by the election, before the Fed finally admits it has blown the world’s biggest ever asset bubble and everything comes crashing down. The only question is whether Powell will follow the advice of Bill Dudley and burst the bubble before the election, or does so just after.


    Tyler Durden

    Sat, 01/04/2020 – 17:00

    Tags
    Business Finance

  • Australian Police Say Arsonists & Lightning To Blame For Bushfires, Not Climate-Change
    Australian Police Say Arsonists & Lightning To Blame For Bushfires, Not Climate-Change

    Authored by Paul Joseph Watson via Summit News,

    Authorities in Australia are working on the premise that arsonists and lightning strikes are to blame for bushfires that have devastated numerous areas of the country, not “climate change” as many global warming alarmists have claimed.

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    Since November, the fires have struck various regions of the state of New South Wales, destroying thousands of buildings and killing at least 22 people.

    Despite the fact that bushfires are not uncommon in Australia, the severity of the damage led numerous climate change alarmists to blame the disaster on man-made global warming.

    Earlier this week, Bernie Sanders blamed those who were “delaying action on climate change” for “the blood-red sky and unbreathable air in Australia because of raging forest fires.”

    However, according to those tasked with investigating the fires, climate change has nothing to do with it.

    “Police are now working on the premise arson is to blame for much of the devastation caused this bushfire season,” reports 7 News Sydney.

    Authorities in the country have formed Strike Force Indarra, comprising of detectives from homicide and arson units in an attempt to find the culprits.

    Other causes for the fires include lightning strikes and a natural weather phenomenon called Dipole, again neither of which have anything to do with man-made climate change.

    Many bushfires are also actually caused by environmentalist ‘green’ policies which prevent land owners from clearing their own vegetation to protect themselves.

    “Governments appeasing the green beast have ignored numerous state and federal bushfire inquiries over the past decade, almost all of which have recommended increasing the practice of “prescribed burning,” writes Miranda Devine. “Also known as “hazard reduction”, it is a methodical regime of burning off flammable ground cover in cooler months, in a controlled fashion, so it does not fuel the inevitable summer bushfires.”

    As ever with climate change alarmists, they don’t let the facts get in the way of a good power grab.

    *  *  *

    My voice is being silenced by free speech-hating Silicon Valley behemoths who want me disappeared forever. It is CRUCIAL that you support me. Please sign up for the free newsletter here. Donate to me on SubscribeStar here. Support my sponsor – Turbo Force – a supercharged boost of clean energy without the comedown.


    Tyler Durden

    Sat, 01/04/2020 – 16:30

    Tags
    Environment

  • U.S. Auto Sales: Decimated In Disastrous And Dismal December
    U.S. Auto Sales: Decimated In Disastrous And Dismal December

    We have been covering the global automotive recession for the better part of 18 months now and, while a lot of our focus has been on the slowdown in China, the United States now appears to be spearheading the misery.

    This revelation comes as a result of what can only be described as absolutely atrocious auto sales numbers for December, which were reported in scattered fashion, hitting the terminal in the appropriate red color, on Friday throughout the day. 

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    Fiat Chrysler sales for Q4 fell 2% despite “robust” demand for the company’s Ram pickup trucks. GM deliveries fell 6% in the quarter and Toyota saw sales fall 6.1% in December, handily missing estimates for a 0.8% gain. 

    And Toyota wasn’t the only automaker that missed estimates in grand fashion: Honda was also expected to report a modest gain in sales, but posted an ugly 12% drop in sales for the quarter.

    Expectations were lower for Nissan, who was expected to post a drop of 22.1% but missed even those pessimistic expectations by posting a monster 29.5% loss for the quarter. 

    Ford is expected to post results on Monday. 

    IBD offered some additional detail on the numbers behind the numbers: 

    • GM deliveries declined 6.3% to 735,909 units in Q4, with fleet sales accounting for 19.7% of the total. For all of 2019, GM deliveries fell 2.3% to 2,887,046 units. North American wholesale sales fell roughly 25% year over year in the quarter. GM cited the 40-day autoworkers’ strike over labor contracts that brought factories to a halt. GM’s newly launched heavy-duty full-size pickups saw sales fall 17% in Q4.

    • Fiat Chrysler reported record Q4 sales for the Ram truck brand, Jeep Wrangler SUV and Dodge Charger passenger car. The Ram brand also posted record full-year sales, amid the launch of the redesigned Ram Heavy Duty pickup truck.

    • For all of 2019, Honda’s sales rose 0.2% to 1,608,170 vehicles. Honda saw declines of 11.3% in December for cars; 2.3% for trucks; 12.9% for the Honda division; and 3.8% for the luxury Acura division. Sales of electric and hybrid vehicles fell 31.4% for December but rose 17.2% for the full year.

    • Nissan auto sales crumbled 29.5% to 104,781 vehicles in December. For all of 2019, Nissan’s sales declined 9.9% to 1,345,681 vehicles. In December, Nissan saw sales plunge 23.4% for cars; 32.9% for trucks; 28.4% in the Nissan division; and 37.8% in the luxury Infiniti division.

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    Look at the year-long 2019 numbers paints an ugly picture, as well.

    GM’s sales fell 2.3% in 2019, dented by the UAW strike that brought more than 30 U.S. factories to a halt toward the end of the year, according to the Wall Street Journal. Fiat’s sales in the U.S. were down 1% for the year and Toyota’s sales fell 2%. Nissan’s sales fell a whopping 10%. 

    Additionally, year end U.S. sales are expected by analysts to come in at a decrease of 1% to 2% for the year, totaling about 17 million sales. Industry forecasters are expecting a steeper drop, to a range of 16.5 million to 16.8 million vehicles. 

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    Jonathan Smoke, chief economist of Cox Automotive, says that record amount of non-housing debt, slowing retail spending and rising severe delinquencies and defaults are continuing concerns for the industry, according to CNBC. He stated: 

    “Retail spending growth began to slow as we entered the fourth quarter. Collectively these trends suggest that the consumer may not be capable of single-handedly carrying the economy in 2020, which is why we are expecting another decline in new-vehicle sales.”


    Tyler Durden

    Sat, 01/04/2020 – 16:00

    Tags
    Business Finance

  • VA Gov. Northam's Proposed Gun-Confiscation Squad
    VA Gov. Northam’s Proposed Gun-Confiscation Squad

    Authored by Scott Cosenza via LibertyNation.com,

    Like the 2011 Virginia earthquake, gun control proposals rumble through the Commonwealth once again. The latest is Governor Ralph Northam’s (D) budget proposal, which includes – among other things – what sure seems to be funding for a gun confiscation squad.

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    Democrats showed their intent to turn Virginia from a state that broadly respects the rights of its residents to bear arms to one that seizes and destroys those guns right after the November elections.  Over 100 cities and counties have declared “sanctuary” pledges to uphold the Second Amendment rights of the people, but the state hasn’t backed down. This led to an opinion from the Democrat Virginia Attorney General proclaiming the sanctuary movement a big legal nothing.  And now we have this very anti-gun budget proposal.

    Guns Or Butter

    Wars are fantastically expensive, especially those fought between two factions in the same nation.  We essentially take 100% of the losses and pay for 100% of the cost, as was the case in our Civil War. Putting aside the notion of extreme violent opposition to the confiscation laws proposed by Governor Northam and the Democratic Caucus, even if resistance is more measured, taking so many guns from so many people will not be easy.   According to an email blast raising the alarm in opposition, the Virginia Citizens Defense League* (VCDL), the state’s leading civil rights champion for gun rights, said:

    • The Governor has requested $4 million and 18 law-enforcement positions to enforce his gun ban – a request that could be the preparatory steps for confiscating the guns which would be banned by SB 16.

    • Moreover, the Governor is requesting another $3.5 million to enforce gun control that has NOT been passed by the legislature and is NOT even current law in Virginia: universal background checks, one gun a month limitations, so-called “red flag” gun confiscation orders, and more.

    The group has encouraged its members to voice their opposition in regional meetings scheduled by various county delegations to the Assembly.  If the turnout is anything like we’ve seen with the sanctuary movement, it will be impressive.

    Elections Have Consequences

    The precursor to the seismic waves now bouncing around Virginia was the November election.  Virginians elected a new legislature for 2020 and gave Democrats a majority for the first time since 1994.  With that, the Dems have decided to swing for the fences on their first up at bat in over 20 years, promoting controversial legislation on gun control, zoning, and gender equality.  It’s the gun control bills that have produced the biggest response – an avalanche of opposition by Virginia gun owners.  Senate Bill 16, which was filed 11 days after the election, bans many common firearms, including the AR-15, and does not grandfather them in.  A more aggressive mission to destroy the guns – and the right to own them – of Virginians could hardly be devised.  If the legislation were to pass, gun owners in Virginia would have to sell or surrender their firearms or become felons.  Hence the backlash.

    The first sanctuary county in Virginia was not established after the November elections, but before.  These confiscation bills were introduced in previous sessions, but they had no chance to pass.  This didn’t matter to the Carroll County Board of Supervisors, who started the trend with a resolution announcing they wished:

    [T]o express its intent to stand as a Sanctuary County for Second Amendment rights and to oppose, within the limits of the Constitutions of the United States and the Commonwealth of Virginia, any efforts to unconstitutionally restrict such rights, and to use such legal means at its disposal to protect the right of the citizens to keep and bear arms, including through legal action, the power of appropriation of public funds, and the right to petition for the redress of grievances.

    Since that measure passed in January of 2019, over 100 independent counties and cities have voted in their own sanctuary protections.  Democrats in Richmond may very well be successful in banning guns in Virginia, but the movement between election day and now gives the lie to the notion that they can do so while claiming the will of the people.


    Tyler Durden

    Sat, 01/04/2020 – 15:30

    Tags
    Politics

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