- Top NSA Whistleblower: Intelligence Agencies DID Spy On Trump
Trump claims that the Obama administration bugged Trump Tower before the election.
Sound nutty?
Perhaps … but former Attorney General Michael Mukasey said that Trump is probably right that Trump Tower was bugged (by the Justice Department, not Obama personally).
And chief Fox News Washington correspondent James Rosen – who Obama's Attorney General Eric Holder ordered be bugged … like many other reporters for well over a decade – said he thought Trump might be right:
Washington's Blog asked the highest-level NSA whistleblower in history – Bill Binney – whether he thought Trump had been bugged.
Binney is the NSA executive who created the agency’s mass surveillance program for digital information, who served as the senior technical director within the agency, who managed six thousand NSA employees.
He was a 36-year NSA veteran widely regarded as a “legend” within the agency and the NSA’s best-ever analyst and code-breaker.
Binney also mapped out the Soviet command-and-control structure before anyone else knew how, and so predicted Soviet invasions before they happened (“in the 1970s, he decrypted the Soviet Union’s command system, which provided the US and its allies with real-time surveillance of all Soviet troop movements and Russian atomic weapons”).
Binney told Washington's Blog:
NSA has all the data through the Upstream programs (Fairview/Stormbrew/Blarney) [background] and backed up by second and some third party country collection.
Plus the FBI and CIA plus others, as of the last month of the Obama administration, have direct access to all the NSA collection (metadata and content on phones,email and banking/credit cards etc.) with no attempt at oversight by anybody [background]. This is all done under Executive Order 12333 [the order which allows unlimited spying no matter what intelligence officials claim] ….
FBI would only ask for a warrant if they wanted to be able to take it into court at some point given they have something meaningful as evidence. This is clearly true given the fact the President Trump's phone conversations with other country leaders were leaked to the mainstream media.
In other words, Binney is saying that Trumps phones were bugged by the NSA without a warrant – remember, top NSA whistleblowers have previously explained that the NSA is spying on virtually all of the digital communications of Americans. – and the NSA shared the raw data with the CIA, FBI and other agencies.
If the FBI obtained a warrant to tap Trump's phone, it was a "parallel construction" to "launder" improperly-gained evidence through acceptable channels.
As we've previously explained:
The government is “laundering” information gained through mass surveillance through other agencies, with an agreement that the agencies will “recreate” the evidence in a “parallel construction” … so they don’t have to admit that the evidence came from unconstitutional spying. This data laundering is getting worse and worse.
So does it mean that the NSA spying on Trump Tower actually turned up some dirt?
Maybe …
But history shows that mass surveillance has long been used to blackmail opponents … including high-level officials. And see this.
And the former NSA director admitted that the mass surveillance is a power grab.
So we won't know until the intelligence agencies actually show their cards … and reveal what evidence they've gathered.
- Worried You Might Buy Bitcoin or Gold, Report 5 Mar, 2017
The price of gold has been rising, but perhaps not enough to suit the hot money. Meanwhile, the price of bitcoin has shot up even faster. From $412, one year ago, to $1290 on Friday, it has gained over 200% (and, unlike gold, we can say that bitcoin went up—it’s a speculative asset that goes up and down with no particular limit). Compared to the price action in bitcoin, gold seems boring. While this is a virtue for gold to be used as money (and a vice for bitcoin), it does tend to attract those who just want to get into the hottest casino du jure.
Perhaps predictably, we saw an ad from a gold bullion dealer. This well-known dealer is comparing gold to bitcoin, and urging customers to stick with gold because of gold’s potential for price appreciation. We would not recommend this argument. Whatever the merits of gold may be, going up faster than bitcoin is not among them.
We spotted an ad today from a mainstream financial adviser. The ad urged clients not to buy gold. This firm should have little need to worry. Stocks have been in a long, long, endless, forever, never-to-end bull market. Gold is not doing anything exciting now. $1234? “WhatEVAH (roll eyes)!” Stocks, well, the prices just keep on going up. Like we said, nothing whatsoever to worry about. Other than declining dividend yields. There’s more than enough irony to go around.
Speaking of dividend yield, that leads us to an idea. Readers know that we like to compare the yield of one investment to another. This is why we quote the basis as an annualized percentage. You can compare basis to LIBOR easily. And also stocks. Or anything else.
For example, the basis for December—a maturity of well under a year—is 1.2%. The dividend yield of the S&P stocks is just 1.9%. For that extra 70bps, you are taking a number of known risks, and some unknown risks too.
It is worth noting that the yield on the 10-year Treasury is up to 2.5%. Yes, that’s right, you are paid less for the risk of investing in big corporations than you are for holding the risk free asset. Of course, the Treasury bond is not really risk free. But in any case, if the Treasury defaults then it’s safe to assume most corporations will be destroyed, if not our whole civilization.
We have heard the mainstream theory so many times, our heads are hurting. Here are the myths: the Chinese are selling, inflation is coming, and the economy is picking up.
China is selling. The Chinese people are selling the yuan to buy dollars. When they can get through the increasingly-strict capital controls. The People’s Bank of China takes the other side of the trade—selling dollars and buying yuan—to keep the yuan from collapsing. When a foreign central bank holds dollars, it does not hold paper notes. Nor does it deposit them in a commercial bank. It holds Treasury bonds. Its sales of Treasurys may look scary, but that is just the seen. The unseen is that the Chinese people are buying dollars. Those dollars come back to the Treasury market one way or the other.
Inflation is coming. The Fed is printing, the quantity of money is going up, there will be demand-pull, etc. Well, if that were true then the last place you would want to be is in an asset whose price is set by the net present value of its future free cash flows. Or at least the price should be. If you think that stock prices have to rise in inflationary periods, look at what happened in the 1970’s.
The economy is picking up. What can we say? There are two views on this. One has seen (or looked for) green shoots and nascent recoveries since the crisis. The other has seen rising asset prices, and with that a small wealth effect. We will not opine about Trump and the future of the economy here. We just wish to note that junk bonds have not sold off the way Treasurys have. Junk bonds have hardly sold off at all.
Quite the opposite. They have been massively bid up (i.e. yield has been crushed). We submit for your consideration that if inflation was coming and/or the economy was picking up, you would do even worse in junk bonds than in S&P stocks.
The 10-year Treasury hit its low yield (so far) of 1.3% in July. Since then, it has been a wild ride mostly up to 2.6% in December. Since then it’s been choppy but falling (i.e. prices rising a bit).
July also happens to be when the yield on the Swiss 10-year government bond began rising. It made a low of -0.6% (yes, negative). Since then, the yield has gone up (i.e. bond price has gone down) to near zero in December. It is currently -0.1%.
In Japan, the same occurred. Low yield on the 10-year government bond in July was -0.3%. High was hit in December. Still elevated now, but off the December high.
It’s almost as if government bond yields around the world were moved by the same drivers, or even connected by some kind of arbitrage…
Whatever the cause of this worldwide selloff of government bonds may be, it is not selling by China. It is not inflation. It is not expectations that the economy will take off under Trump.
Maybe it’s just traders looking at price charts, buying because stocks are going up?
This week, the prices of the metals dropped. As always, the question is what happened to the fundamentals?
Below, we will show the only true picture of the gold and silver supply and demand. But first, the price and ratio charts.
The Prices of Gold and Silver
Next, this is a graph of the gold price measured in silver, otherwise known as the gold to silver ratio. It moved sideways again this week.
The Ratio of the Gold Price to the Silver Price
For each metal, we will look at a graph of the basis and cobasis overlaid with the price of the dollar in terms of the respective metal. It will make it easier to provide brief commentary. The dollar will be represented in green, the basis in blue and cobasis in red.
Here is the gold graph.
The Gold Basis and Cobasis and the Dollar Price
This week, our old friend returned. He is the correlation between the price of the gold (i.e. inverse of the price of gold in dollar terms) and the cobasis (i.e. our scarcity indicator). They had been moving together.
This week, they met up for old time’s sake. The dollar is up from 24.75mg gold to 25.20mg. And the cobasis is up from -0.41% to -0.16%. At least in the April contract which is rapidly approaching First Notice Day, and already under downward pressure. For farther contracts, the cobasis is up, but not that much.
Our calculated fundamental price dipped twenty bucks. It’s still $150 over the market price.
Now let’s look at silver.
The Silver Basis and Cobasis and the Dollar Price
The cobasis in silver move up big-time as well.
The silver fundamental price also fell, about fifteen cents.
© 2017 Monetary Metals
- A NEW SUPER HERO ON THE RIGHT ARISES: BEHOLD THE 'STICK MAN'
It’s always darkest before the dawn. During Saturday’s pro-Trump rally in Berkley, CA, antifags attended and started to rabble rouse — spraying old men in the face with pepper spray, acting like reprobate vagabonds — deserving of the stick.
Then out of nowhere, like the Phoenix rising out from the ash, a superhero appeared — smashing antifags in the heads for sport and pleasure — casting them back into their pits of hell.
BEHOLD, the Stick Man.
And here’s another video of his greatness — this time slowed down for dramatic effect.
Heretofore, let this be a lesson to you leftarded anarchists out there trying to spoil all of the fun: stick man is out there, watching you, waiting to bash your brains in with his glorious stick.
UPDATE: A REAL HERO
Content originally generated at iBankCoin.com
- "It's A Declaration Of War": South Africa's President Calls For Confiscation Of White Land
After South Africa’s embattled president Jacob Zuma pledged, in a surprising address to parliament one month ago, to break up white ownership of business and land to reduce inequality (in a State of the Nation address which was disrupted by a fistfight), it now appears that Zuma’s intentions to convert what was until recently Africa’s most prosperous economy into a new Zimbabwe were all too real, and as the Telegraph reports, the South African president officially called on parliament to change South Africa’s constitution to allow the expropriation of white owned land without compensation.
Zuma, 74, who made the remarks in a speech on Friday morning, said he wanted to establish a “pre-colonial land audit of land use and occupation patterns” before changing the law.
“We need to accept the reality that those who are in parliament where laws are made, particularly the black parties, should unite because we need a two-thirds majority to effect changes in the constitution,” he said.
In recent months, Zuma, who has lurched from one scandal to another since being elected to office in 2009, has adopted a more populist tone since his ruling African National Congress (ANC) party suffered its worst election result last August since the end of apartheid in 1994. The party lost the economic hub of Johannesburg, the capital Pretoria and the coastal city of Port Elizabeth to the moderate Democratic Alliance party, which already held the city of Cape Town.
The ANC is also under pressure from the radical Economic Freedom Fighters, led by Julius Malema. Malema has been travelling the country urging black South Africans to take back land from white invaders and “Dutch thugs”. He told parliament this week that his party wanted to “unite black people in South Africa” to expropriate land without compensation.
“People of South Africa, where you see a beautiful land, take it, it belongs to you,” he said. Although progress has been made in transferring property to black South Africans, land ownership is believed to be skewed in favour of whites more than 20 years after the end of apartheid. The Institute of Race Relations, an independent research body, said that providing a racial breakdown of South Africa’s rural landowners was “almost impossible.”
“In the first place the state owns some 22 per cent of the land in the country, including land in the former homelands, most of which is occupied by black subsistence farmers who have no title and seem unlikely to get it any time soon,” the group said. “This leaves around 78 per cent of land in private hands, but the race of these private owners is not known.”
As the Telegraph adds, Zuma’s comments caused outrage among groups representing Afrikaans speaking farmers on Friday.
The Boer Afrikaner Volksraad, which claims to have 40,000 members, said its members would take land expropriation without compensation as “a declaration of war”.
“We are ready to fight back,” said Andries Breytenbach, the group’s chairman. “We need urgent mediation between us and the government. “If this starts, it will turn into a racial war which we want to prevent.” As noted above, Zuma first mentioned the expropriation of land in his opening of Parliament speech last month, but Friday was the first time he called for a change in the law.
In his February speech, he controversially called in the military to maintain “law and order” on the streets of Cape Town ahead of expected protests calling for him to step down.
It was the first time in South Africa’s history, including the heavily militarised apartheid era, that the president has ordered the military to provide security at parliament.
Meanwhile, the populist wave is spreading and as discussed at the end of February, the local police had to fire rubber bullets into a crowd after anti-immigrant protests turned violent in the capital Pretoria.
President Zuma’s aggressive move toward redistribution comes as his African National Congress party prepares to elect a new leader to succeed him in December and as he finds himself under growing pressure over corruption allegations. It is disturbing that in order to deflect from his own failings as president, Zuma is willing to risk an economic fate reminiscent that of its neighbor to the north, Zimbabwe, where shortly after a similar confiscation of what land, the economy disintegrated into a hyperinflationary supernova.
It took Zimbabwe 15 years to admit its mistakes, and invite white farmers back. It now appears that South Africa will have to learn from the mistakes of its northern neighbor in due course.
- Citi's Matt King: "We Think You Should Sell"
With spreads at post-crisis tights, equities making new highs, and new issues oversubscribed, markets are clearly exuberant. But could it be rational this time? We’re not convinced.
– Citi’s Matt King
In a surprisingly bearish report, Citi’s Matt King has issued a new, long-awaited note in which he asks rhetorically “what’s a manager supposed to do when by early March your asset class has already exceeded your expectation for full-year returns? Take profit and take the rest of the year off, of course! And if it carries on rallying, go outright short!” And yet, he adds, “somehow nobody seems to want to.” The reason for that, according to King is that as we showed demonstrated last week using JPM and BofA data, “the rally owes more to inflows and short covering than to institutional investor exuberance. And part is that the economic data do seem genuinely to be improving.”
Nonetheless, King’s assessment of the current environment is downbeat and to the point: “sell we think you should, not only in € credit (as we advised a couple of weeks ago) but also more broadly.“
He then lays out seven reasons “not to trust your inner Trump”, which are as follows:
1. The Fed may stop the inflow party
The Citi strategist begins by noting that “perhaps the best reason to remain long is that institutional investors seem not to be.” He adds that the vast majority of the FI investors we have seen in recent weeks still believe in secular stagnation, and further notes that “to judge from our survey, overall positions have been creeping longer, but this is due overwhelmingly to positions among $ investors: those in € and £ credit have actually been falling (Figure 1).”
King joins the strategist bandwagon pointing out to the source of recent inflows and states that “the principal driver of investors’ buying seems to have been a response to mutual fund inflows. Not only equity funds but also bond (including both credit and EM) mutual funds have had their biggest 4-week run of inflows since 2013 (Figure 2). Numbers in Europe have been slightly weaker than the US-dominated global totals, but the pattern is similar.”
There is a problem with that: “But while this too might normally be a reason for bullishness, we doubt that the current pace is sustainable.”
Quite apart from the historical inability to maintain this flow rate for long, there is the small problem of the Fed. While at this point a hike on March 15 has been so well telegraphed that it ought not to cause a 2013-style tantrum, we do think much of investors’ willingness to pile into risky assets stems from the lack of return on cash. Each and every additional bp in risk-free yield is likely to make investors think twice about the risk they are running in order to generate return elsewhere.
It is also worth noting that over the past two weeks, BofA has caveated that while retail inflows are seemingly relentless, institutions and hedge funds have recently turned sellers into the rally, and are aggressively offloading to retail, traditionally a market-top indicator.
2. A rise in real yields should weigh on risk assets
King’s second reason why he thinks the rally has been so strong is that real yields have remained surprisingly low. Even as nominal yields have risen since the US election, almost all of the action has been in inflation (and growth) expectations (Figure 3). Traditionally this is positive for risk assets; in contrast, when real yields rise, it weighs on risk assets – albeit sometimes with a lag (Figure 4).
Citi suspects that what has made this move possible is the market’s willingness to focus on all the potential growth positives and yet shrug off the increasing signs of hawkishness from the Fed. “Such a position seems increasingly untenable on two counts. First, rates markets have now finally adjusted to the new mood music from the Fed, and seem increasingly likely to be confronted with an actual hike; second, the rally in credit was starting to look out of whack even with today’s real yield levels, never mind following any proper adjustment to follow.”
3. Central bank support is set to diminish
While it is no secret that King has long been a closet adherent to Austrian Monetary Theory, in his latest piece King reminds regular readers that one of his favourite model for markets’ behaviour in recent years is their correlation with central bank liquidity. While the scale of their purchases over the past half-year or so has been close to record highs, it is already diminishing, and set to diminish further (Figure 5).
He brings attention to BoJ purchases, which in recent months have almost halved since their shift to yield targeting; furthermore ECB purchases will be reduced by one quarter from this month on. In EM, FX reserves have held up well since February last year, and in recent months have been propped up as EM portfolio inflows have gone a long way towards offsetting a worrying trend towards net FDI outflows.
But this too we suspect was aided by the Fed being on hold, and is liable to face renewed pressure as it returns to rate hikes. Besides, the extent of the rally once again seems excessive even for today’s level of CB purchases, never mind relative to its likely future trajectory (Figure 6).
In short, absent a material shift in central bank posture, the traditional driver of risk asset upside will be gone for the foreseeable future.
4. It’s the stimulus, stupid
And then there is China.
As a recent NY Fed report pointed out, “China Accounts For Half Of All Global Debt Created Since 2005.” This echoes what we have been writing about for years, starting back in 2013 showing “How In Five Short Years, China Humiliated The World’s Central Banks“, when we showed that in just the brief period since the financial crisis “Chinese bank assets (and by implication liabilities) have grown by an astounding $15 trillion, bringing the total to over $24 trillion. In other words, China has expanded its financial balance sheet by 50% more than the assets of all global central banks combined.“
This, too, is a worry for the Citi strategist, who writes that “continuing with the idea that market strength owes more to a wave of technical support than to fundamentals, we remain convinced that the recent explosion of credit in China – visible in the monthly total social financing numbers – is of greater global significance than is widely recognized.“
King posits that while it is hard to prove empirically, at an anecdotal level almost every place you visit from San Francisco to Sydney seems to be awash with stories of Chinese investment propping up prices. While most of this is in real estate, King thinks the effects of credit creation spill over from one asset class to another, and increasingly from one region to another also.
The punchline: “fully 80% of the world’s private sector credit creation at present is occurring in China. The evolution of this global total bears at least a passing resemblance to global asset prices (Figure 7).”
Which leads us to the $64 trillion question: is this pace of credit expansion sustainable? Citi’s answer: “we rather doubt it.”
Chinese numbers tend to reach a seasonal high in January as new lending quotas are granted but then to fall off sharply thereafter. And the positive impulse from the recent acceleration in credit creation in China will in any case be hard to sustain just because the absolute rate of growth is already so high. If anything, the recent tendency towards renewed FX outflows – even in the face of tightening capital controls – speaks to a reduction in demand for investment in China itself (Figure 8), itself encouraged by a series of measures designed to introduce brakes on lending, in the property sector in particular. To our minds the wave of recent strong data in China, and associated run-up in many commodity prices which has itself fuelled optimism about a global reflation trade, owes less to a durable upswing in growth – and more to an unsustainable temporary resurgence in credit – than has been reported.
At this point it is worth reminding readers of a recent note from UBS which likewise looked at the global credit impulse and found that it had “suddenly collapse to negative”, primarily as a result of an annualized slowdown in Chinese credit creation.
There is some hope that US or DM credit stimulus would be able to take over even if Chinese stimulus wanes – and indeed, exactly such a hope would seem to be one of the drivers of both the rally and the improvement in much DM survey data. The hope here is that abnormally high savings rates in various developing nations would propel a spending surge. However, King then quickly shoots down the suggestion saying that such an alternative source of credit creation “seems unlikely.” His skepticism is borne from a simple problem of scale: “Corporate balance sheets are already highly levered. Besides, the sheer scale of Chinese borrowing – $3tn/year relative to a mere $800bn in US and Europe combined – makes it difficult to see how these could substitute.“
5. Just how strong are growth prospects really?
To provide a counterpoint to his bearish points, King then asks “what of the counterargument to all this, namely that markets are merely responding to a marked pick-up in global growth prospects, sending secular stagnationists like ourselves scurrying for cover and raising the prospect of a longawaited return to ‘normal’ growth?” He admits that there has been a pickup in both growth and inflation data, and indeed in corporate earnings. And we do buy the argument that, while corporate capex has been weak relative to profits and to GDP, in outright terms it is not perhaps as moribund as pessimists (ourselves included) sometimes make it sound.
Alas, for the Citi strategist, this may be as good as it gets when it comes to global growth, which as DB warned several weeks ago has already started to revert lower, and furthermore as we have been pounding the table for weeks, the improvement has been mostly focused in “soft”, survey-based data:
We are much more skeptical of the likelihood of a continued and self-reinforcing cycle of growth from here. Economic surprises have a natural tendency towards mean reversion and in the US are already starting to come down. A number of commentators are starting to point to the fact that the improvement in economic numbers is heavily skewed towards survey data as opposed to actual production and consumption numbers. US jobless claims at 40-year lows in any case suggests that further hiring may begin to contribute more to inflation than to real GDP
Meanwhile, on the corporate side, while leverage has been declining, recent reports fail to show any evidence of significant revenue growth – one of the vital missing ingredients that could conceivably lead to an acceleration of capex (Figure 11). Perhaps revenues were crimped by $ strength, but overall this suggests that the EPS growth everyone is getting excited about owes more to further cost cutting and perhaps currency moves (helping explain why the pick-up is greater in Europe than in the US) than it does to anything that will sustainably buoy the economy.
As King notes, the market internals already point to this:
Sadly, there are even signs that the equity market itself recognizes this likelihood. While the S&P has continued to rally at a headline level, our equity strategists have pointed out that it is again being driven by defensive sectors, not cyclicals – something historically more consistent with a rally in Treasury yields and a global reach-for-yield than with a growth-led reflation
And then there is the political front: Citi writes that its take on the Trump speech to Congress – with its repeated reference to infrastructure spend but general lack of detail – is that prospects for widespread fiscal reform remain so contentious, even among Republicans, that the likelihood that they drive a significant near-term boost to growth is actually dimming. “Once again, this suggests that markets may be getting ahead of themselves.”
6. The beast that refuses to die – European political risk
And then there is Europe, and especially France where over the past few days, the market promptly assumed that any Le Pen risk overhang has been eliminated. Not so fast, according to King:
To judge from the recent rally in OATs, you could be forgiven for thinking that Macron had been elected already, and that euro break-up risk was once again off the table. Without wanting to get too involved in the labyrinthine twists and turns of what is already turning out to be a decidedly antagonistic campaign, we doubt very much that this risk is gone for good.
Citi then highlights four factors which keep it convinced European periphery risk and French domestic-law bonds are still a ‘sell’ here – and that renewed periphery widening may yet upset markets more broadly.
- First, we still think there is the potential for significant nervousness among real money investors in the run-up to, and immediately after, the likely first-round Le Pen victory. Notwithstanding demand from domestic institutions for bonds that others wish to sell, experience suggests that there is nevertheless a point where domestics become full.
- Second, we still meet too many investors convinced that the ECB will somehow come to the rescue, or even that the market would shrug off a Le Pen victory in the same way as it did Brexit. We could not disagree more strongly.
- Third, even a Macron or Fillon victory seems unlikely to us to consign European political risk to the dustbin of history in the way some have been arguing. Populists everywhere still feel as though they are in the ascendant – just look at the disarray among Democrats in the US, or the heated response to Sir John Major’s and Tony Blair’s stands on Brexit in the UK.
- Fourth and most persuasively, almost regardless of what you think the actual probabilities of euro break-up are, we still see too little by way of premia across markets to compensate investors for the potential risks. Central banks appear to have succeeded in squashing the volatility and fear out of markets without removing the underlying risk factors themselves. The more markets rally, the greater is the potential vulnerability.
7. Finally, Valuations
Last but by no means least, King brings up the most sensitive topic for the market: massively stretched valuations. His rhetorical question is simple: “Do you really want to be buying credit at post-crisis tights, or the S&P at a cyclically-adjusted P/E which has been exceeded only in 1998-2000 and 1929?”
He then notes that the “only metrics on which € credit does not look expensive in our regular Valuations Report are those that are survey-based” and cautions that to the extent that investors want such upside, “we think they would be better served targeting assets that rallied less hard in the first place – albeit in small doses. And yet there, too, our outright inclination is more towards reduction and waiting for a better entry point than towards adding at current levels.”
King’s Conclusion
Having taken a several month sabbatical, the bearish Matt King is officially back: “To sum up, markets seem increasingly to be pricing all of the upside and none of the downside. When there was a risk premium in spreads, and when a wave of central bank and private credit creation seemed likely to carry everything tighter regardless of underlying fundamentals, we were happy to run with that. But we think that risk premium has long gone, and that markets’ strength owes more to those technicals than is widely recognized.”
And a farewell anecdote from the bank’s leading strategist:
When in the days of the Roman Republic generals were awarded the highest honour the Senate could bestow – the right to lead a “triumph”, or parade of the spoils of war, into the city – it is said that a slave was required to stand at their side and whisper constantly into their ear that they too were merely mortal. With the Ides of March approaching – and, rather neatly, coinciding both with an FOMC meeting and with the Dutch elections – we think the timing would be good for investors too to remember to what they owe their improvement in fortunes. We don’t think it’s the arrival of a new emperor.
- When Will The Left Come For You?
Via JC Collins of Philosophy of Metrics.com,
First they came for the Socialists, and I did not speak out—
Because I was not a Socialist.
Then they came for the Trade Unionists, and I did not speak out—
Because I was not a Trade Unionist.
Then they came for the Jews, and I did not speak out—
Because I was not a Jew.
Then they came for me—
And there was no one left to speak for me.– From the Postwar War Anti-Nazi Lectures of Protestant Pastor Martin Niemöller.
From a philosophical perspective I dislike breaking topics down into left and right ideologies. It minimizes and degenerates meaningful conversation into well rehearsed diametrical talking points which do little but entrench and promote ongoing political and social conflict. There have been some articles published which both use and explore these opposing positions, but the focus remains on the semi-engineered outcomes which are expected from such a left vs right political and socioeconomic paradigm.
The term semi-engineered is used for the first time here and is reflective of an allowable and flexible margin related to an unpredictable human quality which exerts itself on all events and situations. The intent is to ensure that the actions and reactions of the electoral body remain predictable. The semi-engineered aspects take these human nature qualities into account and prepares strategies which flow to “natural” and “organic” outcomes. These join other terms such as “grassroots” to make up the talking points of the modern political lexicon.
The Western systems of governance and education hammer the left and right ideologies through the use of mainstream media and alternative media, while using the bricks and mortar institutions of wisdom and learning as a degenerative weapon meant to promote and perpetuate the continued fragmentation and division of the electoral demographic composition.
The argument can be made that this semi-engineering is a product of both extensive conspiratorial planning as well as the human predisposition to avoid change and stick with the known. Conspiratorial planning is not as difficult to define and accept as we have been conditioned to believe. The socioeconomic and geopolitical strategy of “divide and conquer” has been a part of the worlds history as much as anything else. It is more probable that conspiratorial groups of likeminded individuals have directed and shaped the course of human history than it is that all has simply been a result of chance or happenstance.
In the book The Anglo-American Establishment by Georgetown University Professor Carrol Quigley we find that such groups have been defined and have in fact shaped the Western world through its use of the British Empire and subsequently the American hegemonic empire.
Professor Quigley states the following in Chapter 9 titled The Creation of the Commonwealth:
“The evolution of the British Empire into the Commonwealth of Nations is to a very great extent a result of the activities of the Milner Group. To be sure, the ultimate goal of the Group was quite different from the present system, since they wanted a federation of the Empire, but this was a long-run goal, and en route they accepted the present system as a temporary way station. However, the strength of colonial and Dominion feeling, which made the ideal of federation admittedly remote at all times, has succeeded in making this way-station a permanent terminal and thus had eliminated, apparently forever, the hope for federation. With the exception of a few diehards, the Group has accepted the solution of imperial cooperation and “parallelism” as an alternative to federation.”
This paragraph defines for us the function of conspiratorial planning as well as its response to the unpredictable human quality, which in this case, supported Dominion over federation. The plan and strategy of the Group was adjusted and the engineering of the Western governance structures continued. These historical realities are indisputable and provide conclusive evidence of the existence of such conspiratorial groups and sub-groups.
Subsequent groups from that defined above, which have continued the engineering of Western civilization and governance frameworks, have further developed the political left and political right ideologies as fine tuned “weapons of the weak”, which are meant to further erode civil liberties and consolidate power. This is the same objective and scope of work which the Milner Group was tasked with in its attempts to implement a federation but settled on the Dominion for the integration of sovereign regions under the Commonwealth of Nations.
The left position has been established as existing in the progressive spectrum, while the right has been established as existing in the regressive spectrum. The natural and historical tendencies of the electoral population have been positioned on the traditional right. The political left has been attempting to push and pull the mass population and its demographic ideals towards the left spectrum. This is considered progressive and resistance to this program of engineering is labeled as regressive.
From this basic setup the political tension we are experiencing today has developed. Those wanting to remain in the past, or the place from which we have been pushed and pulled, or any attempt to go back to that place, is regressive, while everything which is transforming the past and pulling our civilization further from that past is progressive.
The consideration that everything progressive is not necessarily productive and aligned with the natural demands of homo-protoculture traditions is never considered. Everything left-progressive is positive and everything right-regressive is negative.
The case is now being made by the disorganized mass of the electoral demographic that the left has become regressive while the right is now expressing the qualities of a progressive society. The core argument that the left is now regressive is best expressed in the spread and abuse of political correctness and social justice.
The left-liberal ideology promotes so-called equality and human rights for all. On the face this would appear to be extremely reasonable and honourable. In the first years of this agenda no one could argue with its mandates and goals. It started with equal rights for women, which included voting and other legal alignments which had not before been in demand or expected.
Those few who disagreed with these social objectives were rightly labeled as “chauvinist pigs” and promoters of misogyny. It was the first real movement from the traditional spectrum of the right. It is only in hindsight that we can see this, a rational social movement, as the first step towards a “progressive tyranny” and at the time it was only looked upon and considered a change for the betterment of Western civilization.
The next phase of this progressive social justice built on the ending of slavery which re-manifested as the civil rights war. Like the origins of the feminist movement, the arguments were rational and no ethical and honourable citizen could disagree with equal rights for African-Americans.
It was in the 1970’s that we first began to experience the open social expressions of the marginal segment of the population which represented homosexuality. Television programming such as Three’s Company began to condition and engineer the acceptance of the electoral demographic “right”majority.
In the show Jack, played by the late John Ritter, pretended to be gay so he could live with two women in an apartment. The “homophobic” and “regressive” landlord Mr. Roper would only let Jack live there if he was gay and not straight, as his old school traditional ethics considered a man living in sin with two women as immoral. Hilarity ensued as Jack went through a series of challenges and obstacles to live a normal heterosexual life while maintaining the illusion of homosexuality to fool the simple and backwards Mr. Roper.
Evenings as a child was spent watching Three’s Company and the humour of John Ritter with my family and laughing. It was considered good quality time and I remember laying on the carpet in front of the television with feelings of guilt as I knew late homework waited elsewhere.
It is only now that I look back and see that the show was an early weapon used to marginalize a majority into accepting a social mandate which wasn’t very popular. Nobody wanted to be a fool like Mr. Roper, so we laughed and shut up about our own personal opinions and went about our business of school and work.
The progression of the regressive-left continued through the decades with similar tactics and methods of social engineering. Everything from movies, music, and additional television programming pushed the mass population further away from the traditional roots where Western civilization began. The pendulum swing has gone so far to the left that equal rights for all has now morphed into anti-Christian, anti-white, anti-traditional, anti-male, and anti-Capitalism.
For decades already movies have imagined every mastermind criminal as an evil Capitalist who wants to enslave and control the world. This social engineering is now so rampant that discussions supporting the Capitalist system turn into serious arguments with the liberal-left making accusations of identity politics for the purpose of demeaning and minimizing both the position and character of those promoting Capitalism.
The same methods and techniques are now used on anyone who disagrees with the left ideology and its stated goals and mandates. The mass immigration which has been happening for decades already has taken on a new sense of urgency and panic as migrants and refugees from Islamic nations flood into the West. The differences in culture and beliefs between the West and Islamic cultures is obvious to most but open discussions and analysis are not permitted.
It is beginning to appear that this so-called “Islamophobia”, which has built on the resentment surrounding the labels of Homophobia and Xenophobia, among others, is being established as a benchmark on hate and hate speech. Members of Academia, which have hijacked and used our Western educational institutions to promote the liberal-left agenda, are coming in force to condemn anyone who disagrees with mass Islamic migration and open borders.
It was evenly recently stated that a database, or register, of those charged with hate crimes should be kept so the rights of those individuals can be restricted. The comparison is made to the databases which keep track of sexual offenders. The difference between hate crimes, which often, like Islamophobia, is not clearly defined and can be used to demonize unwanted behaviour from the right, and the actions of sexual offenders such as pedophiles and rapists , are massive. To marginalize a majority as Islamophobic and hateful because it does not want to lose its cultural identity to the onslaught of a culture who, by its very expressed purpose, wants to spread and take over the host culture, is one of the greatest travesties of our modern world.
Creating and maintaining a database of such “offenders of the left” is a horrible suggestion and is reminiscent of the registries which Nazi Germany utilized to track and manage the “undesirables” such as Jews.
There is a concerted effort to criminalize the behaviour and opinions which the liberal-left find undesirable. This is a serious threat to our civilization and the methods by which we ensure the continuation of freedom of speech, electoral voting, and the perpetuation of cultural segregation and division.
A man who recently burned a copy of the Koran was charged with blasphemy. How is this even possible? Our governance system which has become dominated by the left, is using that very same system to restrict the rights of varying demographics. It is ironic that the liberal-left mandates, which were born in seeking equal rights for all, like women having the right to vote, is now attempting to restrict the rights of those who do not agree with its transformed goals and objectives.
First they came for the traditionalists. Few said anything. Then they came for the Christians. Still, few said anything. Eventually they started coming for the males. Nothing. After males they started coming for the whites. Even this couldn’t get everyone to stand united against the tyranny. Now they are using a regressive ideology to take rights away from anyone who disagrees. Finally, some are speaking louder and beginning to be heard. But is it too late? When will the left come for you? Will you now speak out?
- Visualizing The US Debt Ceiling (In $100 Bills)
The United States owes a lot of money. For now, there is no debt ceiling – it has been suspended – but in 10 days that changes, and who knows what happens then.
For some context as to just how much money the US owes – and what the debt ceiling looks like – Demonocracy is back…
One Hundred Dollars
$100 – Most counterfeited money denomination in the world.
Keeps the world moving.Ten Thousand Dollars
$10,000 – Enough for a great vacation or to buy a used car.
Approximately one year of work for the average human on earth.One Million Dollars
$1,000,000 – Not as big of a pile as you thought, huh?
Still, this is 92 years of work for the average human on earth.One Hundred Million Dollars
$100,000,000 – Plenty to go around for everyone.
Fits nicely on an ISO / Military standard sized pallet.The couch is made from $46.7 million of crispy $100 bills.
$100 Million Dollars = 1 year of work for 3500 average Americans
Here are 2000 people standing shoulder to shoulder, looking for a job.
The Federal Reserve's mandate is to maintain price stability and low unemployment.
The Federal Reserve prints money based on the assumption that increasing money supply will boost jobs.One Billion Dollars
$1,000,000,000 – You will need some help when robbing the bank.
Interesting fact: $1 million dollars weighs 10kg exactly.
You are looking at 10 tons of money on those pallets.One Trillion Dollars
$1,000,000,000,000
The 2011 US federal deficit was $1.412 Trillion – 41% more than you see here.If you spent $1 million a day since Jesus was born, you would have not spent $1 trillion by now…
but ~$700 billion- same amount the banks got during bailout.One Trillion Dollars
Comparison of $1,000,000,000,000 dollars to a standard sized American Football field.
Say hello to the Boeing 747-400 transcontinental airliner that's hiding in the back. This was until recently the biggest passenger plane in the world.
You can see the White House with both wings to the right.
"My reading of history convinces me that most bad government results from too much government." – Thomas Jefferson
US Debt Ceiling – $20+ Trillion in 2017
Statue of Liberty seems rather worried as United States national debt is soon to pass 20% of the entire world's combined economy (GDP / Gross Domestic Product).
Here are some cool quotes from cool guys in the past saying the right things about the future and in a sense predicting today:
“I predict future happiness for Americans if they can prevent the government from wasting the labors of the people under the pretense of taking care of them.” – Thomas Jefferson
If the national debt would be laid in a single line of $1 bills, it would stretch from Earth, past Uranus.
122.1 Trillion Dollars
$122,100,000,000,000. – US unfunded liabilities by Dec 31, 2012. We have not upgraded the graphics for 2017 because it simply is pointless. The US government has no plan for fixing unfunded liabilites. This number is so far out there that it is uncomprehensible to most readers but a few mathematicians.
Above you can see the pillar of cold hard $100 bills that dwarfs the WTC & Empire State Building – both at one point world's tallest buildings. If you look carefully you can see the Statue of Liberty.
The 122.1 Trillion dollar super-skyscraper wall is the amount of money the U.S. Government knows it does not have to fully fund the Medicare, Medicare Prescription Drug Program, Social Security, Military and civil servant pensions. It is the money USA knows it will not have to pay all its bills. If you live in USA this is also your personal credit card bill; you are responsible along with everyone else to pay this back. The citizens of USA created the U.S. Government to serve them, this is what the U.S. Government has done while serving The People. The unfunded liability is calculated on current tax and funding inputs, and future demographic shifts in US Population.
Note: On the above 122.1T image the size of the bases of the money stacks are $10 billion, and 400 stories @ $4 trillion.
"It is incumbent on every generation to pay its own debts as it goes. A principle which if acted on would save one-half the wars of the world." – Thomas Jefferson
"This is when you need to remember that when a nation's economy collapses, the wealth of the nation doesn't disappear, it only changes hands."
Government Waste: Missing Money Infographic does a great job showcasing the Trillions lost through miss-management.
Everyone needs to see this…
- The Most (And Least) Worthwhile Degrees
For many young people, the decision of whether to extend their education careers and attend university is a tough one to make. With soaring costs, Statista's Martin Armstrong notes, not all that choose to do a bachelor's degree graduate with the feeling that it was all worthwhile.
Emolument surveyed 1,800 graduates to reveal that the most regretted major is psychology. Only 33 percent of bachelors of this particular science said their degree was worth it. On the other end of the scale, 87 percent of chemistry and natural sciences alumni said they felt their studies were worth it.
You will find more statistics at Statista
We are reminded of The Mises Institute's Josh Grossman comments, that easy access to student loans has created demand for useless degrees.
Last week, former Secretary of Education and US Senator Lamar Alexander wrote in the Wall Street Journal that a college degree is both affordable and an excellent investment. He repeated the usual talking point about how a college degree increases lifetime earnings by a million dollars, “on average.” That part about averages is perhaps the most important part, since all college degrees are certainly not created equal. In fact, once we start to look at the details, we find that a degree may not be the great deal many higher-education boosters seem to think it is.
In my home state of Minnesota, for example, the cost of obtaining a four-year degree at the University of Minnesota for a resident of Minnesota, North Dakota, South Dakota, Manitoba, or Wisconsin is $100,720 (including room and board and miscellaneous fees). For private schools in Minnesota such as St. Olaf, however, the situation is even worse. A four-year degree at this institution will cost $210,920.
This cost compares to an average starting salary for 2014 college graduates of $48,707. However, like GDP numbers this number is misleading because it is an average of all individuals who obtained a four-year degree in any academic field. Regarding the average student loan debt of an individual who graduated in 2013, about 70 percent of these graduates left college with an average student loan debt of $28,400. This entails the average student starting to pay back these loans six months after graduation or upon leaving school without a degree. The reality of this situation is that assuming a student loan interest rate of 6.8 percent and a ten-year repayment period, the average student will be paying $326.83 every month for 120 months or a cumulative total re-payment of $39,219.28. Depending upon a student’s job, this amount can be a substantial monthly financial burden for the average graduate.
All Degrees Are Not of Equal Value
Unfortunately, there is no price incentive for students to choose degrees that are most likely to enable them to pay back loans quickly or easily. In other words, these federal student loans are subsidizing a lack of discrimination in students’ major choice. A person majoring in communications can access the same loans as a student majoring in engineering. Both of these students would also pay the same interest rate, which would not occur in a free market.
In an unhampered market, majors that have a higher probability of default should be required to pay a higher interest rate on money borrowed than majors with a lower probability of default. In summary, it is not just the federal government’s subsidization of student loans that is increasing the cost of college, but the fact that demand for low-paying and high-default majors is increasing, because loans for these majors are supplied at the same price as a major providing high salaries to its possessor with a low probability of default.
And which programs are the most likely to pay off for the student? The top five highest paying bachelor’s degrees include: petroleum engineering, actuarial mathematics, nuclear engineering, chemical engineering and electronics and communications engineering, while the top five lowest paying bachelor’s degrees are: animal science, social work, child development and psychology, theological and ministerial studies, and human development, family studies, and related services. Petroleum engineering has an average starting salary of $93,500 while animal science has an average starting salary of $32,700. This breaks down for a monthly salary for the petroleum engineer of $7,761.67 versus a person working in animal science with a monthly salary of $2,725. Based on the average monthly payment mentioned above, this would equate to a burden of 4.2 percent of monthly income (petroleum engineer) versus a burden of 12 percent of monthly income (animal science). This debt burden is exacerbated by the fact that it is now nearly impossible to have student loan debts wiped away even if one declares bankruptcy.
Ignoring Careers That Don’t Require a Degree
Meanwhile, there are few government loan programs geared toward funding an education in the trades. And yet, for many prospective college students, the trades might be a much more lucrative option. Using the example of plumbing, the average plumber earns $53,820 per year with the employer paying the apprentice a wage and training.
Acknowledging the fact that this average salary is for master plumbers, it still equates to a $20,000 salary difference between it and someone with a four-year degree in animal science while having no student loans as a bonus. Outside of earning a four-year degree in science, technology, engineering, math or, accounting with an average starting salary of $53,300, nursing with an average starting salary of $53,624, or as a family practice doctor on the lower end of physician pay of $161,000, society might be better served if parents and educators would stop using the canard that a four-year degree is always worth the cost outside of a few majors mentioned above. Encouraging students to consider the trades and parents to give their children the money they would spend on a four-year college degree to put a down payment on a house might be a better use of finite economic resources. The alternative of forcing the proverbial square peg into a round hole will condemn another generation to student debt slavery forcing them to put off buying a home or getting married.
Loans Drive Overall Demand
The root of the problem is intervention by the federal government in providing student loans. Since 1965 when President Johnson signed the Higher Education Act tuition, room, and board has increased from $1,105 per year to $18,943 in 2014–2015. This is an increase of 1,714 percent in 50 years. In addition, the Higher Education Act of 1965 created loans which are made by private institutions yet guaranteed by the federal government and capped at 6.8 percent. In case of default on the loans, the federal government — that is, the taxpayers — pick up the tab in order for these lenders to recover 95 cents on every dollar lent. Loaning these funds at below market interest rates and with the federal government backing up these risky loans has led to massive malinvestment as the percentage of high-school graduates enrolled in some form of higher education has increased from 10 percent before World War II to 70 percent by the 1990s. Getting a four-year degree in nearly any academic field seemed to be the way in which to enter or remain in the middle class.
But just as with the housing bubble, keeping interest below market levels while increasing the money supply in terms of loans — while having the taxpayer on the hook for a majority of these same loans — leads to an avalanche of defaults and is a recipe for disaster.
- In WSJ Op-Ed, Peter Navarro Writes Deficits "Could Put US National Security In Jeopardy"
At the end of January, the Euro soared following an FT piece in which Trump’s trade advisor and director of the White House National Trade Council, Peter Navarro, launched what was then seen as the first shot in the transatlantic trade wars, when he accused Germany of using a “grossly undervalued” euro to “exploit the US and its EU partners”, comments which triggered alarms in Europe’s largest economy.
Navarro told the Financial Times the euro was like an “implicit Deutsche Mark” whose low valuation gave Germany an advantage over its main partners. While not necessarily novel – Germany has often been accused of being the biggest winner from a weak euro at the expense of peripheral Europe – his views suggested the new administration is focusing on currency as part of its hard-charging approach on trade ties.
Since then immediate worries about bilateral trade wars have taken a back seat after several paliative comments from Trump’s Treasury secretary, Steven Mnuchin as well as a de-escalation between Trump and Beijing after the president softened his rhetoric on the One China policy. However, worries about trade wars may reemerge following a Sunday evening op-ed in the WSJ by the same Peter Navarro in which he explains “why the White House worries about trade deficits” and highlights that “an imbalance imperils economic growth—and could put U.S. national security in jeopardy.”
Needless to say, from that line alone it is safe to say that the op-ed is hardly USD-positive.
Navarro asks “do trade deficits matter”, noting that the question is important because America’s trade deficit in goods (the Obama administration tends to ignore the trade surplus in services) is “large and persistent, about $2 billion every day.” His affirmative response boils down to the the observation that growth in real GDP depends on only four factors: consumption, government spending, business investment and net exports (the difference between exports and imports). “Reducing a trade deficit through tough, smart negotiations is a way to increase net exports—and boost the rate of economic growth” Navarro writes, by which he simply reflects that positive net trade translates into higher GDP, even if in practice it is never quite that simple as substantial shifts to global trade patterns usually result in subtantial changes in domestic consumption as a result of violent market rebalancing.
Global trade nuances aside, Navarro uses the example of Carrier to demonstrate the “complex adjustments” resulting from changes to trade policy, and invokes the capital account to suggest that as a result of foreign investment in the US to plug the current account shortfall, foreigners may – to cite Warren Buffett – eventually own so much of the U.S. that Americans will wind up working longer hours just to eat and to service the debt.
To better understand these complex adjustments, consider Carrier. Its management had announced the company would close its air-conditioner factory in Indianapolis and move to Mexico—and then sell products back into the U.S. tariff-free. But President-elect Trump and Vice President-elect Pence negotiated a deal to keep Carrier in the U.S. and expand its facilities. How will this show up in government statistics? Fixed nonresidential investment will increase rather than decrease. Imports from Mexico will be lower than they would be otherwise, and U.S. exports will be higher. In today’s parlance, that’s “all good.”
The national-security argument that trade deficits matter begins with this accounting identity: Any deficit in the current account caused by imbalanced trade must be offset by a surplus in the capital account, meaning foreign investment in the U.S.
In the short term, this balance-of-payments equilibrium may be benign, as foreigners return our trade-deficit dollars to American shores by investing in U.S. bonds and stocks and perhaps by building new production facilities. The extra capital keeps mortgage rates lower, the stock market abundantly capitalized, and Americans more fully employed.
But running large and persistent trade deficits also facilitates a pattern of wealth transfers offshore. Warren Buffett refers to this as “conquest by purchase” and warns that foreigners will eventually own so much of the U.S. that Americans will wind up working longer hours just to eat and to service the debt.
Navarro then interpolates his favorite topic, China, and what the consequences of this ascendant superpower’s trade relations with the US could mean for US national security in the long-term:
Dark though it is, Mr. Buffett’s scenario may still be too rosy. Suppose the purchaser is a rapidly militarizing strategic rival intent on world hegemony. It buys up America’s companies, technologies, farmland, food-supply chain—and ultimately controls much of the U.S. defense-industrial base. How might that alternative version of conquest by purchase end for our sons and daughters? Might we lose a broader cold war for America’s freedom and prosperity, not by shots fired but by cash registers ringing? Might we lose a broader hot war because America has sent its defense-industrial base abroad on the wings of a persistent trade deficit?
Supposedly, the theoretical answer to these questions is yes, although the practical response has yet to be written. Furthermore, all of the above is generic Econ 101 textbook stuff.
So does Navarro make any practical trade policy recommendations besides his brief economics lesson? For that we fast forward to the final two paragraphs which tie into Trump’s Feb. 28 Congressional address, in which he expounded on “FAIR” trade, as follows:
Today, after decades of trade deficits and a mass migration of factories offshore, there is only one American company that can repair Navy submarine propellers—and not a single company that can make flat-panel displays for military aircraft or night-vision goggles. Meanwhile, America’s steel industry is on the ropes, its aluminum industry is flat on its back, and its shipbuilding industry is gathering barnacles. The U.S. has begun to lose control of its food-supply chain, and foreign firms are eager to purchase large swaths of Silicon Valley’s treasures.
Much of Wall Street and most economists simply don’t care. But to paraphrase Mike Pence on the 2016 campaign trail, the people of Fort Wayne know better. The analysts at the Pentagon know better, too. That’s why, for both economic and national-security reasons, it is important to bring America’s trade back into balance—through free, fair and reciprocal trade.
In retrospect, Navarro’s op-ed is less fiery than his initial “trade war” statement to the FT, even if it ultimately reverts to a core Trump theme, namely boosting exports to stimulate growth. Perhaps a better question than what is Navarro’s purpose by writing it, is why he is writing it, and does his use of a public forum like the WSJ mean that there is friction between him and Trump camp, especially since in recent weeks it appears that a core pillar of Trump’s trade policies, namely the border adjustability, appear to no longer be on the docket of actionable items. If BAT goes, what else will follow, and will any of Navarro’s trade deficit-cutting plans ever materialize?
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