- Is The Global Dollar In Jeopardy?
Is The Global Dollar In Jeopardy?
Authored by Simon Johnson via Project Syndicate,
Since the end of World War II, the United States dollar has been at the heart of international finance and trade. Over the decades, and despite the many ups and downs of the global economy, the dollar retained its role as the world’s favorite reserve asset. When times are tough or uncertainty reigns, investors flock to dollar-denominated assets, particularly US Treasury debt – ironically, even when there is a financial crisis in the US. As a result, the Federal Reserve – which sets US dollar interest rates – has enormous sway over economic conditions around the world.
For all the associated innovation evident since the launch of the decentralized blockchain-based currency Bitcoin in 2009, the arrival of modern cryptocurrencies has had essentially zero impact on the global taste for dollars. Promoters of these new forms of money still have their hopes, of course, that they can challenge the existing financial system, but the impact on global portfolios has proved minimal. The most powerful central banks (the Fed, the European Central Bank, and a few others) are still running the global money show.
Suddenly, however, there is a new, potentially serious player in town: Facebook’s Libra initiative. Facebook and a currently shifting coalition of firms are planning to launch their own private form of money that would, in some sense, be secured by holdings of major currencies.
Without question, Libra could become a widely used form of payment – partly because Facebook has over two billion monthly active users, but also because the existing financial system is full of inefficiencies. If private money could make it cheaper, easier, and safer to make payments, then consumers would be happy to use it. Few people care what is under the hood of the monetary engine; most just want crash-proof transactions.
The unfortunate truth is that our current payment system is expensive to run, including for sending money overseas in the form of remittances sent by workers back to their home countries. If Libra could allow people to send money as easily (and as cheaply!) as they post updates to Facebook, the currency would get a lot of likes.
We have repeatedly experienced how quickly a disruptive new digital technology can transform the economic landscape. Think of how fast taxis came under pressure from Uber and Lyft.
Bitcoin and its fellow crypto-travelers were designed to supersede financial intermediaries, such as banks. And, in theory, it would be possible to organize much of finance without the kind of banks and other intermediaries that currently exist. But as a matter of inconvenient reality, the crypto-market infrastructure that has developed can hardly be described as consumer-friendly. It’s too easy to lose your money or to have it stolen in myriad ways.
In contrast, Facebook represents a digital technology company that knows how to keep customers happy. Sure, people increasingly complain about its privacy policies or attitudes toward political speech, but they continue to use the service. There is a potentially potent combination lurking here: the rapid scale-up of digital technology, a focus on cheaper safe financial transactions, and a lack of concern for legacy systems.
Of course, Libra has some obvious disadvantages, including Facebook’s current reputation for not acting in the public interest. As a case study in public relations, it’s hard to imagine how the past year could have been worse for Libra’s prospects. And it is always possible for leading countries to block a private form of money by determining that it does not comply with regulations, such as anti-money laundering and Know Your Customer requirements.
But if Libra does not make progress, that just opens more space for some other, more careful corporate-backed entity. Or perhaps the challenge will come from a currency issued by a sovereign state, any of which is entitled to design and circulate its own form of money.
For some time now, there has been speculation that the Chinese renminbi could challenge or even one day displace the US dollar as the world’s main reserve currency. Perhaps, but it is not clear that we are moving closer to that day, because it is not clear that foreign investors will trust the Chinese political system with their rainy-day funds.
Still, the Fed is right to be concerned, if not worried. Growing potential competitive pressure – the Libra effect – creates an incentive to make the existing system work better, including through the new FedNow system, which will speed up payments.
In a recent speech, Fed Governor Lael Brainard argued that the Fed will innovate, to a moderate degree, and the dollar will be fine. She may be right. But for the first time in a long while, competition is coming to central banks. With a bit of luck, consumers may end up with a better deal.
Tyler Durden
Wed, 11/06/2019 – 00:05 - US Navy Secretary Warns Of "Fragile" Supply Chain And "Great Power Competition"
US Navy Secretary Warns Of "Fragile" Supply Chain And "Great Power Competition"
The U.S. is attempting to not just decouple its economy from the rest of the world, which won’t happen until wartime, but now there’s new evidence that supply chains for military warships could soon be recognized after it was found Russia and China supply critical components.
U.S. Secretary of the Navy Richard Spencer told the Financial Times (FT) in an exclusive interview that a top-level report found many contractors building warships used “high-tech and high-precision parts” from foreign countries, some of those countries were Russia and China.
Spencer said the U.S. is in a “great power competition” with both countries, and it’s vital that critical components made in those countries aren’t used in U.S. warships. This means some of those supply chains of how contractors procure crucial components need to be reworked into allied countries and or produced domestically.
Spencer then warned about how Beijing is “weaponizing capital” across 152 countries in Asia, Europe, Africa, the Middle East, and the Americas, through its Belt and Road Initiative (BRI). He accused China of forcing countries into a ‘debt trap’ to gain access and control over natural resources.
“You go to a country in need, you fill that need which they are grateful for, but at some point do they turn around and go: ‘You know what, everybody out, we’re going to use this now . . . the keys are mine’?” Spencer said. “There’s nothing that prevents that.”
China recently began BRI projects in Italy, near the site of Italian shipbuilder Fincantieri, a top finalist to develop the Navy’s new frigate. Spencer said he had a long talk with Fincantieri management about the need to protect internal networks from Chinese hackers.
Spencer said there has been a tremendous effort to restore domestic supply chains and invest in factories to build out manufacturing capabilities.
But he added one of the most challenging parts of restoring the U.S. industrial base is convincing investment banks to fund weapon manufacturing facilities.
Spencer launched a “trusted capital” program where private equity funds can obtain more access to funding military projects.
As we heard on Monday, the U.S. and its Asian allies have launched a global infrastructure program, called the Blue Dot Network, that will directly compete with BRI.
The U.S.’ attempt to decouple its economy from the world, reorganize military supply chains away from Russia and China, and launch an alternative BRI program is a clear indication that the “great power competition” is only in the beginning innings.
Tyler Durden
Tue, 11/05/2019 – 23:45 - 'Omniviolence' Is Coming And The World Isn't Ready
'Omniviolence' Is Coming And The World Isn't Ready
Authored by Phil Torres via Nautil.us,
In The Future of Violence, Benjamin Wittes and Gabriella Blum discuss a disturbing hypothetical scenario. A lone actor in Nigeria, “home to a great deal of spamming and online fraud activity,” tricks women and teenage girls into downloading malware that enables him to monitor and record their activity, for the purposes of blackmail. The real story involved a California man who the FBI eventually caught and sent to prison for six years, but if he had been elsewhere in the world he might have gotten away with it. Many countries, as Wittes and Blum note, “have neither the will nor the means to monitor cybercrime, prosecute offenders, or extradite suspects to the United States.”
Technology is, in other words, enabling criminals to target anyone anywhere and, due to democratization, increasingly at scale.
Emerging bio-, nano-, and cyber-technologies are becoming more and more accessible. The political scientist Daniel Deudney has a word for what can result: “omniviolence.” The ratio of killers to killed, or “K/K ratio,” is falling.
For example, computer scientist Stuart Russell has vividly described how a small group of malicious agents might engage in omniviolence:
“A very, very small quadcopter, one inch in diameter can carry a one-or two-gram shaped charge,” he says.
“You can order them from a drone manufacturer in China. You can program the code to say: ‘Here are thousands of photographs of the kinds of things I want to target.’ A one-gram shaped charge can punch a hole in nine millimeters of steel, so presumably you can also punch a hole in someone’s head. You can fit about three million of those in a semi-tractor-trailer. You can drive up I-95 with three trucks and have 10 million weapons attacking New York City. They don’t have to be very effective, only 5 or 10% of them have to find the target.”
Manufacturers will be producing millions of these drones, available for purchase just as with guns now, Russell points out, “except millions of guns don’t matter unless you have a million soldiers. You need only three guys to write the program and launch.”
In this scenario, the K/K ratio could be perhaps 3/1,000,000, assuming a 10-percent accuracy and only a single one-gram shaped charge per drone.
That’s completely—and horrifyingly—unprecedented. The terrorist or psychopath of the future, however, will have not just the Internet or drones—called “slaughterbots” in this video from the Future of Life Institute—but also synthetic biology, nanotechnology, and advanced AI systems at their disposal. These tools make wreaking havoc across international borders trivial, which raises the question: Will emerging technologies make the state system obsolete? It’s hard to see why not.
What justifies the existence of the state, English philosopher Thomas Hobbes argued, is a “social contract.”
People give up certain freedoms in exchange for state-provided security, whereby the state acts as a neutral “referee” that can intervene when people get into disputes, punish people who steal and murder, and enforce contracts signed by parties with competing interests.
The trouble is that if anyone anywhere can attack anyone anywhere else, then states will become – and are becoming – unable to satisfy their primary duty as referee. It’s a trend toward anarchy, “the war of all against all,” as Hobbes put it – in other words a condition of everyone living in constant fear of being harmed by their neighbors.
Indeed, in a recent paper, “The Vulnerable World Hypothesis,” published in Global Policy, the Oxford philosopher Nick Bostrom argues that the only way to defend against a global catastrophe is to employ a universal and invasive surveillance system, what he calls a “High-tech Panopticon.” Sound dystopian? It sure does to me.
“Creating and operating the High-tech Panopticon would require substantial investment,” Bostrom writes, “but thanks to the falling price of cameras, data transmission, storage, and computing, and the rapid advances in AI-enabled content analysis, it may soon become both technologically feasible and affordable.”
Bostrom is well-aware of the downsides—corrupt actors in a state could exploit this surveillance for totalitarian ends, or hackers could blackmail unsuspecting victims. Yet the fact is that it may still be a better option than suffering one global catastrophe after another.
How can societies counterattack omniviolence? One strategy could be a superintelligent machine—essentially, an extremely powerful algorithm—that’s specifically designed to govern fairly. We could then put the algorithm in political charge and, insofar as it governs as something like a “Philosopher King,” not worry constantly about the data collected being misused or abused. Of course, this is a fantastical proposal. Even the real-world use of AI in the justice system is fraught with problems. But at this point, do we have a better idea for preventing the collapse of the state system under the weight of widespread technological empowerment?
Perhaps a completely new idea will emerge that can preserve the current system—if we even want it preserved. Or perhaps emerging technologies won’t empower people as much as I and others anticipate. It could be that offensive technologies will actually lag behind defensive technologies, making it very difficult to execute a successful attack. It could also be that before omniviolence and democratization undercut the state, civilization collapses because of climate change-linked stressors like lethal heatwaves, megadroughts, coastal flooding, rising sea-levels, melting glaciers and polar ice caps, desertification, food supply disruptions, disease outbreaks, biodiversity loss, species extinctions, and mass migrations. If we ended up living as hunter-gatherers again, the main worry would be sticks and stones, not designer pathogens and artificial intelligence.
Civilization is an experiment. We may not get the results we’re expecting. So humanity would do well to hope for the best but prepare for the worst.
* * *
Phil Torres is a scholar of global catastrophic risks, and author of several books. His essay, “Superintelligence and the Future of Governance: On Prioritizing the Control Problem at the End of History,” appears in the 2018 anthology, Artificial Intelligence Safety and Security.
Tyler Durden
Tue, 11/05/2019 – 23:25 - China Launches High-Res Satellite To Monitor Belt And Road Projects
China Launches High-Res Satellite To Monitor Belt And Road Projects
China on Sunday launched a new high-resolution remote sensing satellite, called the Gaofen-7, which will be used to monitor Belt and Road Initiative (BRI) infrastructure projects, reported Xinhua.
The Gaofen-7 was launched on top of a Long March-4B rocket on Sunday at the Taiyuan Satellite Launch Centre in northern China.
Video of Long March 4B carrier rocket sending Gaofen 7 high-resolution Earth-observation #satellite into space on Sunday morning from the Taiyuan Satellite Launch Center in N China’s Shanxi. pic.twitter.com/Cq1DuA3mWL
— China Science (@PDChinaScience) November 4, 2019
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China Central Television (CCTV), citing China National Space Administration (CNSA), said the optical surveying and mapping satellite would mostly be used for urban planning and statistical research, which will allow China to reduce its dependence on foreign satellites.
China’s Gaofen-7 Earth observation satellite was successfully sent into space on Sunday.
The satellite is a camera system composed of two line-scan cameras to capture 3D images of the Earth, and a laser altimeter to measure height more precisely. pic.twitter.com/QVsPTFhnz6— China Focus (@China__Focus) November 4, 2019
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The Ministry of Natural Resources, the Ministry of Housing, and Urban-Rural Development and the National Bureau of Statistics will be the three most active users of Gaofen-7.
According to CNSA, the Gaofen series of satellites will support a surveillance network above Earth that will monitor the atmosphere, the ground, and oceans on a 24-hour basis.
The Gaofen project began in 2010. The first satellite was launched in 2013, and five more have been launched since (Gaofen satellite list via Xinhua):
- Gaofen-1, launched into space in April 2013, is a high-resolution observation satellite.
- Gaofen-2, sent into space in August 2014, is accurate to 0.8 meters in full color and can collect multispectral images of objects greater than 3.2 meters in length.
- Gaofen-4, launched in late 2015, is China’s first geosynchronous orbit high-definition optical imaging satellite.
- Gaofen-3, launched in August 2016, is China’s first synthetic aperture radar imaging satellite.
- Gaofen-5, launched in May 2018, has the highest spectral resolution of China’s remote sensing satellites.
- Gaofen-6, launched in June 2018, has a similar function to that of Gaofen-1, but with better cameras, and its high-resolution images can cover a large area of the earth.
The launch of Gaofen-1 coincides with the start date of BRI infrastructure development and investment projects.
In the last six years, China has expanded BRI projects in 152 countries across Asia, Europe, Africa, the Middle East, and the Americas.
It seems like China has just built a giant surveillance network of satellites that will monitor its global infrastructure projects.
Tyler Durden
Tue, 11/05/2019 – 23:05 - Trump's Impeachment Lures Democrats Into A Cold War Mentality
Trump's Impeachment Lures Democrats Into A Cold War Mentality
Authored by Aaron Maté via TheNation.com,
The hawkish mindset that liberals have embraced threatens not just their own political fortunes but also global peace…
Last week’s vote by House Democrats to formally open an impeachment inquiry of President Donald Trump followed testimony that appeared to boost their case. Several US officials told Congress that the Trump administration sought to leverage US military aid to pressure Ukraine into opening politically tainted investigations. But liberals cheering on these developments should be mindful of their limitations—and their potential consequences. The available testimony does not strike me as being as damning for Trump as it is being portrayed. More importantly, even if that proves to be a faulty interpretation, the impeachment frenzy is enrolling liberals in a dangerous Cold War mentality that could threaten their own election chances in 2020.
The Democrats’ theory of the case is plausible: At the same time as Trump’s chosen point man, EU Ambassador Gordon Sondland, pressured Ukraine to launch politically beneficial investigations, the president froze military aid as a tool of added leverage. But although the available testimony helps the impeachment case so far, we have not uncovered a smoking gun.
Bill Taylor, the top US diplomat in Ukraine, says that Sondland told him that the military assistance was conditioned on a Ukrainian pledge to open investigations into Burisma, the company where Hunter Biden got his lucrative board seat, and alleged Ukrainian interference in the 2016 US election. Taylor also offered the first known testimony that this demand was made explicit to the Ukrainian side: According to Taylor, National Security Council aide Tim Morrison told him that Sondland directly communicated the quid pro quo to Andriy Yermak, an aide to Ukraine’s prime minister, Volodymyr Zelensky, at a meeting in Warsaw in September 1.
Morrison corroborated Taylor’s testimony in his appearance last week. But we do not yet know whether Morrison witnessed the Sondland-Yermak conversation that he told Taylor about, or is relying on his recollection of what Sondland told him. This would allow Sondland to claim that Morrison misinterpreted him.
What is certain is that Morrison left some wiggle room for Trump. His opening statement says that he and Taylor “had no reason to believe that the release of the security sector assistance might be conditioned on a public statement reopening the Burisma investigation” until he spoke to Sondland in Warsaw on September 1. “Even then,” he added, “I hoped that Ambassador Sondland’s strategy was exclusively his own,” and not Trump’s. According to CNN, Morrison testified that he tried to find out whether Sondland was relaying demands to the Ukrainian side on Trump’s behalf, or was “going rogue” as a “free radical.” The fact that Morrison suspected that Sondland’s “strategy was exclusively his own” means that his testimony did not directly implicate Trump. And it leaves Trump with the leeway to claim that Sondland, and perhaps Rudolph Giuliani, were indeed “going rogue.”
It is perfectly reasonable to deduce from all of this that what Sondland relayed—if that is what he did—is exactly what Trump intended. Or indeed that Sondland was acting on Trump’s orders. But a case that can only be made from inference may have limited impact beyond those who have already made up their mind. Even if Trump knew exactly what Sondland was doing, Morrison’s testimony leaves him with the opportunity to throw Sondland under the bus. For his part, Sondland has said through his attorney that he rejects Taylor’s characterizations and does not recall the Warsaw conversation that Taylor (and now Morrison) claim to have heard about.
For Taylor and Morrison’s testimony to prove dispositive—and to make a convincing case to the broader US public and the Senate Republicans who will decide Trump’s fate—corroborating testimony or evidence will have to emerge that Trump explicitly linked the military aid to investigations of Biden and that this demand was explicitly communicated to the Ukrainian side.
That corroboration has yet to come from Ukraine. The Ukrainian government has said that it did not feel pressured. The New York Times reported that Ukrainian officials were made aware that US military aid was on hold by the first week in August, earlier than previously known. Yet communications between US and Ukrainian officials, the Times writes, “did not explicitly link the assistance freeze to the push by Mr. Trump and Mr. Giuliani for the investigations.” Nor was the aid freeze mentioned in Trump’s July 25 phone call with Zelensky.
Yermak, reached via WhatsApp, did not respond to The Nation’s request for comment. His testimony will now be critical. As will follow-up testimony by Sondland. Perhaps Taylor and Morrison are accurately recounting Sondland’s words. Or perhaps Sondland will contradict them, or claim that they are conflating the investigations that Trump sought from Ukraine. As I’ve argued previously, demanding an investigation of documented (and openly acknowledged) Ukrainian meddling in the 2016 elections is different from demanding one of a political rival.
All of this positions us for a “he said, he said” impeachment scandal: The question of whether or not Trump is guilty of attempting to extort Ukraine could come down to which US bureaucrat, one chooses to believe.
There is no reason to put faith in Sondland, who, in line with a longstanding tradition in US diplomacy, owes his plush diplomatic posting to a lucrative campaign donation to the winning presidential candidate. But before we embrace bureaucrats Taylor, Morrison, and another key witness, NSC official Alexander Vindman, as liberal heroes, it is worth taking stock of their impartiality and espoused views. Despite efforts to portray them as nonpartisan civil servants, the trio’s opening statements show them to be Cold Warriors devoted to continuing the US-Russia proxy war in Ukraine. As their testimony makes clear, that proxy war was imperiled by the very action that Trump took—briefly freezing the military aid that they all unabashedly support.
In the case of Taylor, arming Ukraine was a condition of his willingness to serve in the job. When the Trump administration asked him to take the position in Kiev, Taylor recalls thinking, “I could be effective only if the US policy of strong support for Ukraine… were to continue.” Taylor even told Secretary of State Mike Pompeo, “If US policy toward Ukraine changed, he would not want me posted there and I could not stay.” No wonder then, that Taylor was upset when he began to hear rumblings that US military assistance to Ukraine was in jeopardy.
Another star witness, Vindman, offers a similar outlook. Russia, he says, “has manifested an overtly aggressive foreign policy” necessitating “a deterrent.” To Vindman, that deterrent is “a strong and independent Ukraine,” which, he believes, is “critical to US national security interests because Ukraine is a frontline state and a bulwark against Russian aggression.” Morrison concurs, declaring that the administration’s policy “was to make sure the United States’ longstanding bipartisan commitment to strengthen Ukraine’s security remained unaltered.” In his view, “security sector assistance… is, therefore, essential to Ukraine.”
Given their open dedication to ensuring the continuation of US military aid to Ukraine, it is reasonable to question if the trio’s interpretations of decisions and conversations about freezing military aid were colored by their own policy preferences. As The Washington Post put it, Vindman “told lawmakers that he was deeply troubled by what he interpreted as an attempt by the president to subvert U.S. foreign policy.” While undoubtedly many Democrats and Republicans share Vindman’s foreign policy views, it should be up to the president, not unelected bureaucrats, to decide US foreign policy.
Even if their recollections are accurate, the consequence of embracing their collective worldview is worth considering. We do not need wade far into the intricacies of the Russia-Ukraine conflict to know that the position of Taylor, Vindman, and Morrison—and by extension, the entire liberal political and media establishment now cheering them—is well to the right of what the Democratic Party embodied just one administration ago.
The very US military assistance that Trump froze is the same that President Barack Obama refused to provide during his last years in office. Obama feared, as The New York Times noted in 2015, that US weapons sent to Ukraine “would only escalate the bloodshed” in the Donbass and possibly “[end] up in the hands of thugs” (a likely reference to far-right Ukrainians, which proved prescient).
In refusing to send that US military aid, Obama rejected intense pressure from the bipartisan DC foreign policy establishment. This includes Taylor himself, who, as he notes in his opening statement, unsuccessfully lobbied Obama to arm Ukraine. Taylor’s contemporaneous view is captured in a December 2014 letter he wrote to The Washington Post. Taylor denounced an opinion article, co-authored by a former Obama State Department official, that had opposed sending US arms to Ukraine and advocated an agreement between NATO and Russia to resolve the Ukrainian crisis. Backers of such steps, Taylor wrote, are “advocating that the West appease Russia.… Now is not the time for appeasement.”
The very fact that Ukrainegate now has Democrats advocating a policy that Obama rejected should be enough to spark consideration of whether briefly not arming Ukraine is really the issue on which to pin removing a president from office. Moving toward impeachment over Ukraine policy also has potential electoral consequences: In 2016, voters rejected the neoconservative worldview that national security bureaucrats like Taylor, Vindman, and Morrison now espouse. Trump, after all, campaigned on improving ties with Russia and falsely presented himself as an opponent of the hawkish legacy that these star impeachment witnesses embody. On this note, the fact that John Bolton may become the Democrats’ next star witness might also hasten some reflection.
The Cold War mindset that liberals have embraced threatens not just their own political fortunes but also global peace. Lost in the outrage over Trump’s potential—and ultimately unrealized—interruption of US military assistance to Ukraine is that Zelensky, the new Ukrainian president, openly campaigned on ending the war with Russia that this military assistance fuels. Zelensky is now under heavy pressure from Ukraine’s far right to abandon his pledge to make peace with Moscow. It does not bode well for Zelensky’s chances if the official opposition party of his US patron is effectively joining hands with his country’s own right-wing forces to continue the war.
The dangers extend beyond Ukraine’s borders. The day after the House impeachment vote, Russia warned that there is not enough time left to renegotiate the New START Treaty, the last remaining accord limiting the US and Russian nuclear arsenals, before it expires in 2021. The treaty’s demise, The New York Times notes, would leave the world’s top two nuclear powers “free to expand their arsenals without limits” on “the most powerful weapons both sides can launch.” According to Vladimir Leontyev, Russia’s top arms control official, the Kremlin hopes to renew or revise the accord, but “the US administration is silent about it.” The Russians’ impression, Leontyev added, is that the Trump White House “is organically against any restrictions being imposed on the United States.”
The Russian warning, the Times adds, is “the latest in a sobering list of signals that the great powers appear headed for a new arms race,” following Trump’s earlier withdrawal from another critical nuclear accord, the INF Treaty. It is also the latest in a long list of Trump administration policies that have escalated tensions with nuclear-armed Russia—including authorizing the US military assistance to Ukraine that Obama once opposed and that Democrats now seek to impeach him over. The fact that this list includes increasing the threat of nuclear conflict should be sobering to any liberal who continues to push the falsehood that Trump does Russia’s bidding—all the more so given that the propagation of this falsehood helps worsen, rather than reduce, those tensions.
There is another list worth being mindful of: The many Trump administration scandals that Ukrainegate, like Russiagate before it, overshadows. The day after the House impeachment vote also coincided with the end of the comment period for a Trump administration plan to cut food programs for low-income Americans. According to government estimates, around 3 million recipients face the loss of food stamp benefits and close to 1 million children are at risk of losing automatic placement in federal school lunch programs.
“Instead of declaring a war on poverty, this president has declared war on our most vulnerable citizens,” Representative Marcia Fudge (D-OH), the chairwoman of the House Agriculture Committee’s subcommittee on nutrition, said last month. That is undoubtedly correct, which makes it all the more puzzling that Democrats are preoccupied with an impeachment scandal that overshadows Trump’s attacks on the vulnerable and encourages him to escalate wars abroad. The same goes for their stance on Syria, which saw bipartisan opposition to an announced US withdrawal but next to no opposition to Trump’s sudden reversal with the explicit aim of stealing Syria’s oil.
It is true that polls currently show that a majority of Americans support impeachment. It is also encouraging that Democratic presidential candidates are sidelining the impeachment drama to focus on serious policy issues on the campaign trail. At the same time, it appears that Democrats are not moving the needle in the battleground states that will decide the next election. A new New York Times/Siena College poll of the six closest swing states that went Republican in 2016 finds that Trump’s “advantage in the Electoral College relative to the nation as a whole remains intact or has even grown since 2016.”
With 2020 on the horizon, the dangers of the Democratic establishment’s priorities cannot be emphasized enough.
Tyler Durden
Tue, 11/05/2019 – 22:45 - China Exports African Swine Fever To Russia
China Exports African Swine Fever To Russia
A new report from Bloomberg details how African swine fever has likely been exported to Russia. This could be problematic for Russia, due in part that if the hog-killing disease spreads, it could start wiping out large swaths of herds, as it has already done in China.
In the last several months, about 60 cases of African swine fever have been reported to Russian authorities in the Amur Oblast region in Russia, a federal district that borders China in the Russian Far East.
Dirk Pfeiffer, a professor of veterinary medicine and life sciences at the City University of Hong Kong, told Bloomberg that a cross-border spread between the two countries is likely underway. “Wild boar are very likely to now also be infected in northern China,” Pfeiffer said.
China has so far observed at least 50% of its herd this year wiped out from the fast-spreading disease.
Russia’s hog population in the Far East accounts for barely 2% of the country’s total hog population, which for now, could be contained.
Rosselkhoznadzor, Russia’s biosecurity watchdog, has been on guard for a cross-border spread since summer, there have been several reports of Chinse citizens attempting to sneak infected meat across checkpoints into Russia.
Andriy Rozstalnyy, an animal health officer with the Food and Agriculture Organization of the UN, told Bloomberg that once the wild pig population is infected with African swine fever, then the spread of the disease is virtually uncontrollable.
In the last month, 275 pigs have died, and 2,473 have been killed in the Amur Oblast region, a move spurred by authorities to limit the outbreak.
The cross-border spread of African swine fever, from China to Russia, is undoubtedly a significant cause for concern because now countries bordering China are being affected.
Meanwhile, the US is sitting on record cold storage of pork bellies, something that China and Russia might be interested in…
Tyler Durden
Tue, 11/05/2019 – 22:25 - Ron Paul Pans Law Enforcement's New Mass Surveillance Plan: Sentence First, Crime Later?
Ron Paul Pans Law Enforcement's New Mass Surveillance Plan: Sentence First, Crime Later?
Authored by Ron Paul via The Ron Paul Institute for Peace & Prosperity,
Attorney General William Barr recently sent a memo to law enforcement officials announcing a new federal initiative that would use techniques and tools developed in the war on terror, such as mass surveillance, to identify potential mass shooters. Those so identified would be targets of early interventions, which would include the disregarding of Second Amendment rights, as well as the imposing of mandatory counseling and involuntary commitment.
The program would likely match data collected via mass surveillance with algorithms designed to identify those with mental problems that would lead them to commit violent crimes. So, this program would deprive Americans of respect for their rights not because they committed, or even threaten to commit, a violent act but because their tweets, texts, or Facebook posts trigger a government algorithm.
In order to enhance the government’s ability to conduct mass surveillance, Barr has been trying to force tech companies to allow the government to have a “backdoor” for accessing electronic information. This would allow the government to read all messages — even those that are encrypted, making it all but impossible to escape the government’s watchful eye.
Many mental health professionals admit that diagnosing mental health issues involves a degree of subjectivity. So how can we trust a government-designed computer algorithm to accurately identify those with mental health problems? The answer is we can’t. Barr’s program will no doubt result in many individuals who are not a threat to anyone being deprived of respect for their rights. The program will also fail in detecting future mass shooters.
Some mental health professionals argue that holding certain political beliefs is a sign of mental illness. Not surprisingly, federal agencies like the FBI agree that those expressing “anti-government extremism”— like supporting a constitutional republic instead of a welfare-warfare state — are potential threats.
A recent internal FBI memo warned that a belief in “conspiracy theories” is a sign that someone could be a domestic terrorist. “Conspiracy theorist” is an all-purpose smear used against anyone who questions the government’s official narrative on an event or issue. Tying a belief in “conspiracy theory” to terrorism is an effort to not just stigmatize but actually criminalize dissenting thoughts on matters such as foreign policy, climate change, gun control, and the Federal Reserve.
Some people support using political beliefs as a basis for labeling someone as “mentally disturbed” because they think it will mainly affect “right-wing extremists.” These people are ignoring the FBI’s history of harassing civil rights and antiwar activists, as well as the recent controversy over the FBI labeling “black identity extremists” as a threat.
A government program to monitor electronic communications to identify potential mass shooters puts all Americans at risk of losing their liberty due to their political views or a few social media posts. All those who value liberty must oppose this dangerous program.
Tyler Durden
Tue, 11/05/2019 – 22:05 - Adobe Is Leading The Charge Against The Growing Epidemic Of Deepfake Videos
Adobe Is Leading The Charge Against The Growing Epidemic Of Deepfake Videos
The reality of deepfakes – or human image synthesis based on artificial intelligence to fake human participation in videos – is becoming so widespread and alarming that some of the biggest names in technology are teaming up with the New York Times to combat the problem.
With advances in editing tools and AI, fake videos – used for purposes spanning political motives to good old revenge porn – are becoming more prominent and certainly more convincing. “It will soon be possible to make convincing videos showing anyone saying anything and photos of things that never happened,” according to Axios.
As a result, Twitter, Adobe and the New York Times are now proposing a collaborative effort to make clear who makes photos or videos, and what changes have been made to them along the way.
Adobe is hoping to implement a system that allows publishers to append secure distribution data to content. The company could include the technology in its own tools, but it seeks for the technology to be an “open standard” that others would also use. The company showed a prototype of this tool earlier this week at its MAX conference in Los Angeles.
The companies are joined by a startup called Truepic, which also aims to create a “secure path” from the moment a photo or video is captured that can then be used to verify its authenticity.
Axios’ Kaveh Waddell said that the idea: “…solves a small but important layer of the online trust crisis. This would allow a reader to verify that something came from Axios — but if they are skeptical of Axios to begin with, that won’t matter. Verification that isn’t easily accessible threatens to bifurcate online information into ‘trusted content’ from those who have the resources to verify it and an easily dismissed information underclass.”
Many companies are looking to prove authenticity via means of blockchain or decentralized lists of transactions that can’t be altered. An alternative idea involves a database held by a single company. Adobe has commented that it has not yet finalized what type of mechanism it will use.
Adobe general counsel Dana Rao said: “When it comes to the problem of deepfakes, we think the answer really is around ‘knowledge is power’ and transparency. We feel if we give people information about who and what to trust, we think they will have the ability to make good choices.”
New York Times’ head of R&D Marc Lavallee commented: “Discerning trusted news on the internet is one of the biggest challenges news consumers face today. Combating misinformation will require the entire ecosystem — creators, publishers and platforms — to work together.”
Finally, Twitter trust and safety head Del Harvey said: “Serving and enhancing global public conversation is our core mission at Twitter. Everyone has a role to play in information quality and media literacy.”
Adobe will be hosting a summit at its headquarters next month to continue the discussion. “We do look at this as a shared responsibility,” Rao concluded.
Tyler Durden
Tue, 11/05/2019 – 21:45 - Chinese State-Sponsored Hackers Intercept Text Messages Worldwide: Cyber Report
Chinese State-Sponsored Hackers Intercept Text Messages Worldwide: Cyber Report
Authored by Nicole Hao via The Epoch Times,
U.S.-based cybersecurity firm FireEye revealed that a state-backed Chinese hacker group APT41 has compromised several major telecom firms and retrieved call records from the carriers’ customers whom they deemed as targets, intercepting text messages as well as call records worldwide.
The report did not name the telecom companies. The hackers searched call and text records for specific keywords, including the names of “high-value” targets such as the names of politicians, intelligence organizations, and political movements “at odds with the Chinese government,” according to the report.
This is not the first time that Chinese state-sponsored hackers were reported to have intercepted international cell phone text messages. U.S.-based cybersecurity firm Cybereason released a report on Jun. 25, discussing how hacker group APT10 conducted persistent attacks since 2017 on global telecommunications providers. Cybereason concluded that APT10 operates “on behalf of the Chinese Ministry of State Security,” China’s chief intelligence agency. They were to obtain call detail records (CDR), which includes call time, duration, the involved phone numbers, and geolocation.
MESSAGETAP
FireEye published its study on text message security on Oct. 31, focusing on a new tool that APT41 is using: a malware named MESSAGETAP, to intercept people’s text messages worldwide.
Text messages are also called short message service (SMS) messages, referring to the plain word messages that are sent and received by cellphones.
The report explained that APT41 hackers installed MESSAGETAP on the Short Message Service Center (SMSC) servers of the targeted telecom carriers. The malware can then monitor all network connections to and from the server.
MESSAGETAP can intercept all SMS messaging traffic, which includes the content of the messages; their cellphones’ unique identifiers, known as international mobile subscriber identity (IMSI) number; and the source and destination phone numbers.
Furthermore, the hackers can set up keywords in MESSAGETAP, allowing the malware to filter the content that the hackers are looking for.
During the investigation, FireEye found out that hackers searched keywords such as the names of “foreign high-ranking individuals of interest to the Chinese intelligence services,” as well as political leaders, military and intelligence organizations, and political movements.
FireEye said they observed four telecommunication organizations being targeted by APT41 in 2019.
APT41’s Targets
FireEye previously released a full report on APT41 in August, titled “Double Dragon: APT41, a dual espionage and cyber crime operation.”
“Double” refers to the fact that “APT41 is a Chinese state-sponsored espionage group that is also conducting financially motivated activity for personal gain,” since 2012. It did not provide further details about who has hired APT41’s services.
One particular pattern emerged: “APT41 targets industries in a manner generally aligned with China’s Five-Year economic development plans” and Beijing’s ten-year’s plan “Made in China 2025,” according to the report.
The hacker group also gathers intelligence ahead of important events, such as mergers and acquisitions (M&A) and political events.
“Made in China 2025,” first launched in 2015, is an economic blueprint for China to become the dominant manufacturing nation in the world in 10 key high-technology verticals, such as pharmaceuticals, artificial intelligence, and robotics.
APT41 targets healthcare (including medical devices and diagnostics), pharmaceuticals, retail, software companies, telecoms, travel services, education, video games, and virtual currencies, according to the report.
APT41 has targeted firms in those sectors located in the United States, UK, France, Italy, Holland, Switzerland, Turkey, Japan, South Korea, Singapore, India, Myanmar, Thailand, and South Africa.
Purpose and Tools
FireEye found out that APT41 focused on stealing intellectual property from those targeted countries. But beginning in mid-2015, the hackers “have moved toward strategic intelligence collection and establishing access and away from direct intellectual property theft.”
The hacker group uses “over 46 different malware families and tools to accomplish their missions, including publicly available utilities, malware shared with other Chinese espionage operations, and tools unique to the group,” the report said.
In order for a firm to protect itself from potential attacks from APT41, FireEye warned firms not to open unfamiliar emails: “The group often relies on spear-phishing emails with attachments such as compiled HTML (.chm) files to initially compromise their victims.”
Tyler Durden
Tue, 11/05/2019 – 21:25 - The Rise Of Robots Is Crippling Jobs In The Already Recessionary Auto Industry
The Rise Of Robots Is Crippling Jobs In The Already Recessionary Auto Industry
It’s no longer a question of “if” we’re going to all eventually be replaced with robot overlords in the workplace, it’s a question of “when”.
The nuances of how this is going to occur – like which industries are likely to see to the most disruption from automation – were the topic of a new study published by St. Louis Fed Economist Maximiliano Dvorkin and Research Associate Asha Bharadwaj.
The authors found that there has been predominantly a decline in U.S. “middle-skill” occupations as a result of automation. This was despite growth in both high- and low-skill occupations occurring at the same time.
According to the authors, this job polarization is a result of “automation and offshoring, because both these forces lower the demand for middle-skill occupations relative to the rest.”
In the study, the authors looked at two types of work:
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Whether jobs involve routine tasks or nonroutine tasks
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Whether jobs use mostly cognitive skills or manual skills (brain vs. brawn)
They also looked at how the state of employment has changed across these four categories:
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Nonroutine cognitive, which includes management, professional and related occupations
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Nonroutine manual, which includes service occupations related to assisting or caring for others, such as health care support, food preparation and serving, and cleaning
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Routine cognitive, which includes sales and office occupations
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Routine manual, which includes construction, transportation, production and repair occupations
The study found that “employment in nonroutine occupations, both cognitive and manual, has been increasing steadily for several decades, while employment in routine occupations has been mostly stagnant or even declining.”
The authors also honed in on robots used specifically for industrial automation processes.
The study found: “Industrial robots are fully autonomous machines that do not require any human intervention and can be reprogrammed to perform several manual tasks. For instance, technologies like tractors or elevators are not industrial robots since they are able to perform only specific tasks and require some degree of human intervention.”
And the use of robots in industrial automation isn’t just prominent in the U.S. – industrial robots per thousand workers was higher in Germany and Italy.
“France and the average of the countries Spain, the U.K. and Sweden were ahead of the U.S. in the late 1990s and early 2000s, but in the last decade, it seems that the U.S. has overtaken these countries,” the study found.
Arguably the most important finding, however, was that the automotive industry – an industry already being ravaged by recession and job cuts – is seeing the highest distribution of robots out of all industries.
The study concluded: “Clearly, the automotive industry is by far the largest user of robots, in the U.S. as well as in other advanced countries around the world. For instance, in 2014, the automotive industry accounted for around 54% of the total U.S. stock of robots. For Germany, the share was higher, at around 60%.”
It’s just another brick in the wall of the worsening picture if you are dependent on the automotive industry, which has collapsed globally over the last 18 months, take make your living.
Tyler Durden
Tue, 11/05/2019 – 21:05 -
- Living Under The Spectre Of Hyperinflation: 1923 Weimar And Today
Living Under The Spectre Of Hyperinflation: 1923 Weimar And Today
Authored by Matthew Ehret via The StrategiC ulture Foundation,
While world’s attention is absorbed by tectonic shifts unfolding across the Middle East, and as many Americans are brainwashed to believe the 2020 elections are driven by the need to impeach President Trump, something very ominous has appeared “off of the radar” of most onlookers. This something is a financial collapse of the western banks that threatens to unleash chaos upon the world.
In my last report, I discussed why the current financial system is on the verge of a 1923-Weimar style hyperinflation driven by Federal Reserve bailouts trying desperately to support a deleveraging of the $1200 trillion derivatives bubble that has taken over the western banking system. I also discussed the Bank of England-led “solution” currently to this crisis involves a new global “green” digital currency with new “rules” which are very similar to the 1923 Bank of England “solution” to Germany’s economic chaos which eventually required a fascist governance mechanism to impose it onto the masses.
In this article, I wish to take a deeper look at the causes and effects of Weimar Germany’s completely un-necessary collapse into hyperinflation and chaos during the period of 1919-1923.
Versailles and the Destruction of Germany
Britain had been the leading hand behind the orchestration of WWI and the destruction of the potential German-Russian-American-Ottoman alliance that had begun to take form by the late 19th century as foolish Kaiser Wilhelm discovered (though sadly too late) when he said: “the world will be engulfed in the most terrible of wars, the ultimate aim of which is the ruin of Germany. England, France and Russia have conspired for our annihilation… that is the naked truth of the situation which was slowly but surely created by Edward VII”.
Just as the British oligarchy managed the war, so too did they organize the reparations conference in France which, among other things, imposed impossible debt repayments upon a defeated Germany and created the League of Nations which was meant to become the instrument for a “post-nation state world order”. Lloyd George led the British delegation alongside his assistant Philip Kerr (Lord Lothian), Leo Amery, Lord Robert Cecil and Lord John Maynard Keynes who have a long term agenda to bring about a global dictatorship. All of these figures were members of the newly emerging Round Table Movement, that had taken full control of Britain by ousting Asquith in 1916, and which is at the heart of today’s “deep state”.
After the 1918 Armistice dismantled Germany’s army and navy, the once powerful nation was now forced to pay the impossible sum of 132 billion gold marks to the victors and had to give up territories representing 10% of its population (Alsace-Loraine, Ruhr, and North Silesia) which made up 15% of its arable land, 12% of its livestock, 74% of its iron ore, 63% of its zinc production, and 26% of its coal. Germany also had to give up 8000 locomotives, 225 000 railcars and all of its colonies. It was a field day of modern pillage.
Germany was left with very few options. Taxes were increased and imports were cut entirely while exports were increased. This policy (reminiscent of the IMF austerity techniques in use today) failed entirely as both fell 60%. Germany gave up half of its gold supply and still barely a dent was made in the debt payments. By June 1920 the decision was made to begin a new strategy: increase the printing press. Rather than the “miracle cure” which desperate monetarists foolishly believed it would be, this solution resulted in an asymptotic devaluation of the currency into hyperinflation. From June 2020 to October 1923 the money supply in circulation skyrocketed from 68.1 gold marks to 496.6 quintillion gold marks. In June 1922, 300 marks exchanged $1 US and in November 1923, it took 42 trillion marks to get $1 US! Images are still available of Germans pushing wheel barrows of cash down the street, just to buy a stick of butter and bread (1Kg of Bread sold for $428 billion marks in 1923).
With the currency’s loss of value, industrial output fell by 50%, unemployment rose to over 30% and food intake collapsed by over half of pre-war levels. German director Fritz Lang’s 1922 film Dr. Mabuse (The Gambler) exposed the insanity of German population’s collapse into speculative insanity as those who had the means began betting against the German mark in order to protect themselves thus only helping to collapse the mark from within. This is very reminiscent of those Americans today short selling the US dollar rather than fighting for a systemic solution.
1923: City of London’s Solution is imposed
When the hyperinflationary blowout of Germany resulted in total un-governability of the state, a solution took the form of the Wall Street authored “Dawes Plan” which necessitated the use of a London-trained golem by the name of Hjalmar Schacht. First introduced as Currency Commissioner in November 1923 and soon President of the Reichsbank, Schacht’s first act was to visit Bank of England’s governor Montagu Norman in London who provided Schacht a blueprint for proceeding with Germany’s restructuring. Schacht returned to “solve” the crisis with the very same poison that caused it.
First announcing a new currency called the “rentenmark” set on a fixed value exchanging 1 trillion reichsmarks for 1 new rentenmark, Germans were robbed yet again. This new currency would operate under “new rules” never before seen in Germany’s history: Mass privatizations resulted in Anglo-American conglomerates purchasing state enterprises. IG Farben, Thyssen, Union Banking, Brown Brothers Harriman, Standard Oil, JP Morgan and Union Banking took control Germany’s finances, mining and industrial interests under the supervision of John Foster Dulles, Montagu Norman, Averill Harriman and other deep state actors. This was famously exposed in the 1961 film Judgement at Nuremburg by Stanley Kramer.
Schacht next cut credit to industries, raised taxes and imposed mass austerity on “useless spending”. 390 000 civil servants were fired, unions and collective bargaining was destroyed and wages were slashed by 15%.
As one can imagine, this destruction of life after the hell of Versailles was intolerable and civil unrest began to boil over in ways that even the powerful London-Wall Street bankers (and their mercenaries) couldn’t control. An enforcer was needed unhindered by the republic’s democratic institutions to force Schacht’s economics onto the people. An up-and-coming rabble rousing failed painter who had made waves in a Beerhall Putsch on November 8, 1923 was perfect.
One Last Attempt to Save Germany
Though Hitler grew in power over the coming decade of Schachtian economics, one last republican effort was made to prevent Germany from plunging into a fascist hell in the form of the November 1932 election victory of General Kurt von Schleicher as Chancellor of Germany. Schleicher had been a co-architect of Rapallo alongside Rathenau a decade earlier and was a strong proponent of the Friedrich List Society’s program of public works and internal improvements promoted by industrialist Wilhelm Lautenbach. The Nazi party’s public support collapsed and it found itself bankrupt. Hitler had fallen into depression and was even contemplating suicide when “a legal coup” was unleashed by the Anglo-American elite resulting in Wall Street funds pouring into Nazi coffers.
By January 30, 1933 Hitler gained Chancellorship where he quickly took dictatorial powers under the “state of emergency” caused by the burning of the Reichstag in March 1933. By 1934 the Night of the Long Knives saw General Schleicher and hundreds of other German patriots assassinated and it was only a few years until the City of London-Wall Street Frankenstein monster stormed across the world.
The New Silk Road or New World Order
Today’s world sits atop a bubble of unimagined proportions which began to blow in 2008 and has been kept afloat by nothing more than a decade of blind hope mixed with money printing, zero interest rates, speculation and austerity. The PHYSICAL economic basis supporting the money system has been crippled due to 40 years of post-industrial consumerism rampant across the west. While it is admitted that the U.S dollar cannot remain the reserve currency for the world as it has from 1945-present, those same central banking forces from London have admitted that if their plans for a “one-world” green digital currency is not forced onto nations, then China’s Yuan and the New Silk Road will shape the new system.
Whether London will manage to succeed in 2020 pushing a fascist de-carbonization (ie: depopulation) scheme onto the world where their 1920 Monster failed remains to be seen.
Tyler Durden
Tue, 11/05/2019 – 20:45 - US Army Purchases 624 Robotic Mules For Combat Use
US Army Purchases 624 Robotic Mules For Combat Use
In an effort to rapidly modernize before the next large-scale military conflict, the US Army has purchased 624 robotic mules from General Dynamics Land Systems (GDLS), a deal worth more than $162 million, reported Defense Blog.
GDLS’ MUTT (Multi-Utility Tactical Transport) is designed to reduce a soldier’s load by carrying gear on an 8×8 unmanned ATV.
According to Army officials, MUTT can haul up to 1,000 pounds of gear and is designed to follow infantry soldiers on the battlefield, through some of the harshest terrains.
Infantry soldiers carry between 60-120 pounds of gear, and MUTT can alleviate nearly 80% of the weight, which allows soldiers to move swiftly across the battlefield.
MUTT comes in several sizes: tracked, 6×6, and 8×8. It measures 9 feet long by 5 feet wide, can carry 1,000 pounds of gear, and also provide 3,000 watts of power, in addition to a 60-mile range.
Besides hauling soldiers’ heavy gear packs, MUTT can hold anti-tank missiles and or spare ammunition.
Several other uses include evacuating wounded soldiers from frontlines, surveillance missions with high-tech sensors, and it can even be outfitted with machine guns, anti-tank missiles, and or grenade launchers to conduct attack missions.
In 2H18, soldiers from the 10th Mountain Division at Fort Drum, New York, were given several MUTTs for a field training exercise that simulated warzone like conditions.
“It’s a huge upgrade for the dismounted reconnaissance troop. I picked up five casualties in one night at different locations with this vehicle [MUTT] that I wouldn’t have been able to do. I’d have been able to make it to maybe two,” said 1st Sgt. Joshua Richards, 1st Brigade Combat Team.
The next big push with the Army are robots for the modern battlefield. Before you know it, these artificially intelligent machines will be making war decessions without any or limited input from humans. The rise of the terminator is happening.
Tyler Durden
Tue, 11/05/2019 – 20:25 - Dalio: "The World Has Gone Mad And The System Is Broken"
Dalio: "The World Has Gone Mad And The System Is Broken"
Authored by Ray Dalio via LinkedIn.com,
I say these things because:
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Money is free for those who are creditworthy because the investors who are giving it to them are willing to get back less than they give. More specifically investors lending to those who are creditworthy will accept very low or negative interest rates and won’t require having their principal paid back for the foreseeable future. They are doing this because they have an enormous amount of money to invest that has been, and continues to be, pushed on them by central banks that are buying financial assets in their futile attempts to push economic activity and inflation up. The reason that this money that is being pushed on investors isn’t pushing growth and inflation much higher is that the investors who are getting it want to invest it rather than spend it. This dynamic is creating a “pushing on a string” dynamic that has happened many times before in history (though not in our lifetimes) and was thoroughly explained in my book Principles for Navigating Big Debt Crises. As a result of this dynamic, the prices of financial assets have gone way up and the future expected returns have gone way down while economic growth and inflation remain sluggish. Those big price rises and the resulting low expected returns are not just true for bonds; they are equally true for equities, private equity, and venture capital, though these assets’ low expected returns are not as apparent as they are for bond investments because these equity-like investments don’t have stated returns the way bonds do. As a result, their expected returns are left to investors’ imaginations. Because investors have so much money to invest and because of past success stories of stocks of revolutionary technology companies doing so well, more companies than at any time since the dot-com bubble don’t have to make profits or even have clear paths to making profits to sell their stock because they can instead sell their dreams to those investors who are flush with money and borrowing power. There is now so much money wanting to buy these dreams that in some cases venture capital investors are pushing money onto startups that don’t want more money because they already have more than enough; but the investors are threatening to harm these companies by providing enormous support to their startup competitors if they don’t take the money. This pushing of money onto investors is understandable because these investment managers, especially venture capital and private equity investment managers, now have large piles of committed and uninvested cash that they need to invest in order to meet their promises to their clients and collect their fees.
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At the same time, large government deficits exist and will almost certainly increase substantially, which will require huge amounts of more debt to be sold by governments—amounts that cannot naturally be absorbed without driving up interest rates at a time when an interest rate rise would be devastating for markets and economies because the world is so leveraged long. Where will the money come from to buy these bonds and fund these deficits? It will almost certainly come from central banks, which will buy the debt that is produced with freshly printed money. This whole dynamic in which sound finance is being thrown out the window will continue and probably accelerate, especially in the reserve currency countries and their currencies—i.e., in the US, Europe, and Japan, and in the dollar, euro, and yen.
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At the same time, pension and healthcare liability payments will increasingly be coming due while many of those who are obligated to pay them don’t have enough money to meet their obligations. Right now many pension funds that have investments that are intended to meet their pension obligations use assumed returns that are agreed to with their regulators. They are typically much higher (around 7%) than the market returns that are built into the pricing and that are likely to be produced. As a result, many of those who have the obligations to deliver the money to pay these pensions are unlikely to have enough money to meet their obligations. Those who are recipients of these benefits and expecting these commitments to be adhered to are typically teachers and other government employees who are also being squeezed by budget cuts. They are unlikely to quietly accept having their benefits cut. While pension obligations at least have some funding, most healthcare obligations are funded on a pay-as-you-go basis, and because of the shifting demographics in which fewer earners are having to support a larger population of baby boomers needing healthcare, there isn’t enough money to fund these obligations either. Since there isn’t enough money to fund these pension and healthcare obligations, there will likely be an ugly battle to determine how much of the gap will be bridged by 1) cutting benefits, 2) raising taxes, and 3) printing money (which would have to be done at the federal level and pass to those at the state level who need it). This will exacerbate the wealth gap battle. While none of these three paths are good, printing money is the easiest path because it is the most hidden way of creating a wealth transfer and it tends to make asset prices rise. After all, debt and other financial obligations that are denominated in the amount of money owed only require the debtors to deliver money; because there are no limitations made on the amounts of money that can be printed or the value of that money, it is the easiest path. The big risk of this path is that it threatens the viability of the three major world reserve currencies as viable storeholds of wealth. At the same time, if policy makers can’t monetize these obligations, then the rich/poor battle over how much expenses should be cut and how much taxes should be raised will be much worse. As a result rich capitalists will increasingly move to places in which the wealth gaps and conflicts are less severe and government officials in those losing these big tax payers will increasingly try to find ways to trap them.
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At the same time as money is essentially free for those who have money and creditworthiness, it is essentially unavailable to those who don’t have money and creditworthiness, which contributes to the rising wealth, opportunity, and political gaps. Also contributing to these gaps are the technological advances that investors and the entrepreneurs that I previously mentioned are excited by in the ways I described, and that also replace workers with machines. Because the “trickle-down” process of having money at the top trickle down to workers and others by improving their earnings and creditworthiness is not working, the system of making capitalism work well for most people is broken.
This set of circumstances is unsustainable and certainly can no longer be pushed as it has been pushed since 2008. That is why I believe that the world is approaching a big paradigm shift.
Tyler Durden
Tue, 11/05/2019 – 20:11 -
- Schlichter: Trump Is Derailing The Elite's Gravy Train
Schlichter: Trump Is Derailing The Elite's Gravy Train
Authored by Kurt Schlichter, op-ed via Townhall.com,
Like the garbage French elite of long ago, our American garbage elite of today has learned nothing and forgotten nothing.
For four years, it has been focused entirely on deep-sixing Donald Trump for his unforgivable crime of demanding that our ruling caste be held accountable for its legacy of failure. Instead of focusing on not being terrible at their job of running America’s institutions, our elitists have decided that the real problem is us Normals being angry about how they are terrible at their job of running America’s institutions.
So, let’s imagine that they finally vanquish Trump, though every time they come up against him they end up dragging themselves home like Ned Beatty after a particularly tough canoe trip.
What happens then?
What happens then is that it’s back to business as usual, and for decades, business as usual for our garbage elite has not merely been running our institutions badly but pillaging and looting our country for power, prestige and cash.
The difference is that in the future they will be much more careful to ensure that no one who is not in on the scam will ever again come anywhere near the levers of power. You can already see it – the demands that we defer to the bureaucrats they own, the attacks on the idea of free expression, and the campaign to disarm us. Their objective is no more Trumps, just an endless line of progressive would-be Maduros with the march toward despair occasionally put on pause for a term by some Fredocon Republican who hates us Normals just as much as the Dems, but won’t admit it until after he’s out of office.
Our garbage elite talks a good game about its service and moral superiority, but if our betters were actually better than us, we would not be having this national conversation about how awful they are.
The fact is that what they want to do is go back to the way it was before Trump, back to 2015, aka the year 1 BT – Before Trump. Back then, progressive Democrats got their bizarre social pathologies normalized. Moderate Democrats got money, power and an open season on the local talent. Corporate types represented largely by squishy Republicans got globalism and the ability to ship our jobs out and import Third World serfs in. And the fake conservatives of Conservative, Inc., got to cash in without the necessity of actually conserving anything.
The only people that the old system didn’t work for were the American people.
It’s important to remember and to always remind yourself, that everything our elite says about its motives and morals is a lie and a scam. Take the whole #MeToo thing. This was supposed to be some sort of revolutionary rebellion against the sexual exploitation of the powerless by the powerful. It’s not, and never was. Rather, it’s simply an internal power struggle among and within the elites to reallocate power among snooty people who don’t give a damn about you or me.
The fall of Harvey Weinstein or Matt Lauer or any of the other bigwigs means nothing to the conservative single mom being exploited by the Democrat donors who own Walmart. It was actually striving female members of the elite – actresses, models, media figures, executives – leveraging the monstrosity of the creeps at the top to increase their own power within the elite. Do you see any of these #MeToo heroines, now that they have taken their scalps, helping their non-elite sisters out in Gun-Jesusland? Yeah, right. They are lining up with the rest of their elite pals to shaft us.
What you do see is excuses. They excuse Bill Clinton and his enabler Felonia Milhous von Pantsuit. They excuse Gropey Joe. They are in the process of excusing Katie Hill, whose naked hairbrush photo has ensured that none of us will ever sit on a hotel room chair again. Why no outrage? Why no concern? Because taking out Stumbles McMyturn or Hoover’s Dad or Congresswoman Every Man’s Lesbian Fantasy Destroyer does not help the faction of the elite that benefited from #MeToo. That would help us, but not the elite. Throuple Gal was exposed by Townhall’s peppery sister site Redstate, not the mainstream media, and the mainstream media is horrified – not by her furniture defilement but that word of it got through the gate they yearn to keep.
The simple fact is that they desperately want Trump out so they can return to the good old days of winks, nods, and payoffs.
Look at the Biden Family Crime Syndicate and the antics of the junior capo of the Cosa Nose Candy. In what universe is it A-OK that the crack-fueled Johnny Appleseed of paternity suits that is Joe’s snortunate son was cashing in on $50K a month in sweet, sweet Ukrainian gas gold just weeks after Ensign Biden got booted because he tooted? And then there’s riding on Air Force Two to the NBA’s favorite dictatorship for some commie ducats. Now there are even some Romanian shenanigans too – is there a single country on earth that Totally-Not-Senile Joe didn’t shake down for the benefit of his daughter-in-law’s second hubby?
But our garbage elite’s garbage media seems amazingly uninterested in all this – it’s fascinated by the timing of a situation room snap after Trump unleashed the Army’s Delta Force on al-Baghdadi and by dog medal memes, but the Veep’s boy’s bag-mannery is not merely of no interest but is something they close their fussy phalanx ranks around to protect. Keep in mind, the premise underlying the whole star chamber impeachment festival of onanism is that Donald Trump, America’s chief law enforcement officer, was somehow wrong and bad and double-plus ungood because he allegedly asked the Ukrainians, “Hey, what’s the dealio with the Columbia Kid’s pay-offs?”
In a non-bizarro political universe, the proper reaction to the Prezzy demanding, “You best fork over the evidence on these manifestly corrupt antics involving the Vice-President of the United States or we’re cutting you off from the American taxpayers’ feeding trough,” would be, “Hell to the yeah, four more years! Four more years!’
But it’s not, because the elite likes its sexual abuse and its foreign cash and its total lack of accountability to us, the Normals, the people who are supposed to be the ones that our elite is working for. The elite has not learned its lesson. It has not admitted that it sucks and resolved to stop sucking.
Instead, it has doubled down. And if it gets power again, it will act to solve what it sees as the most urgent problem facing America – the fact that we the people have the ability to reject the elite’s utter incompetence and surpassing greed and elect someone with a mandate to burn down the whole rotten edifice.
If the elitists get power again, they are never letting go of it, not without a fight. And now, doesn’t the elite’s obsessive fixation on shutting down conservative dissent, eliminating competing institutions (like religious entities), and disarming law-abiding Americans make a lot more sense?
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Our garbage elite is outraged over the success of my action-packed yet hilarious novels of America torn apart by liberal malice, People’s Republic, Indian Country and Wildfire. In a few weeks, Number IV, Collapse, will drop. They call these books “appalling.” They don’t want you to read them. That’s better than any blurb!
Tyler Durden
Tue, 11/05/2019 – 20:05 - Most Severe Internet Outage To Date Hits Iraq After Government Blocks Access
Most Severe Internet Outage To Date Hits Iraq After Government Blocks Access
Iraqi anti-government demonstrators fear a major new crackdown is coming after much of the nation’s internet access has been cut, especially in the restive south. This also as Baghdad authorities fear outside ‘foreign interference’ after President Trump referenced the mass protests on Twitter.
A nearly nationwide blockage was first reported last night, and was briefly restored early Tuesday before being cut off again. “At the time of writing, national connectivity has fallen below 19% of normal levels sending tens of millions of users offline across Baghdad, also impacting Basra, Karbala and other population centers,” Reuters cited NetBlocks as stating late in the day Monday. “The new disruption is believed to be the most severe observed in Iraq to date,” the report added.
The large scale protests, raging for over a month, have resulted in violent clashes with police, and involved Iraq’s paramilitary units backed by Iran. And NetBlocks monitoring group further observed into Tuesday — “Internet shut down again across most of Iraq following brief 3.5 hour restoration; real-time network data show national connectivity currently at 30% of ordinary levels” — related to the ongoing mass protests which have swept the country for over the past month.
After accusations of Iran being involved in assisting and directing Baghdad security forces’ crackdown, which in many case has involved live ammo to disband crowds, resulting at this point in over 250 Iraqis killed and nearly 10,000 wounded, there’s growing fears that a Syria-style broader proxy war could emerge.
⚠️ Alert: Internet shut down again across most of #Iraq following brief 3.5 hour restoration; real-time network data show national connectivity currently at 30% of ordinary levels; incident ongoing #iraq_protests #KeepItOn 📉
📰 https://t.co/SeCyP2mj1T pic.twitter.com/Qx7Mdqs9pp
— NetBlocks.org (@netblocks) November 5, 2019
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The major government ordered blockage came a day after on Sunday the Iranian consulate in the city of Karbala came under attack by throngs of demonstrators and was torched, in the latest sign of public backlash over perceived Iranian control of Iraq’s politics and military.
On Sunday President Trump retweeted two videos showing the attack on the consulate, no doubt as encouragement given it was an Iranian target. It’s possible or even likely that this was a deciding factor in authorities blocking internet access for most of the country.
#BREAKING: Dozens of Iraqi demonstrators have stormed the Iranian consulate in #Karbala, lowering the flag and burning part of the outer wall #IraqProtests https://t.co/axoNKBjwHh pic.twitter.com/4wLEJYImKW
— Arab News (@arabnews) November 3, 2019
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President Trump retweeted the above, along with another video of the consulate attack.
NetBlocks and the NGO Internet Society have estimated that the current internet blockage, the most significant in the nation’s history, has now cost Iraq over $1.3 billion.
Tyler Durden
Tue, 11/05/2019 – 19:45 - All US Intel Agencies Confirm No Evidence Of Meddling In Election, Urge Everyone To Panic Nonetheless
All US Intel Agencies Confirm No Evidence Of Meddling In Election, Urge Everyone To Panic Nonetheless
Let the fearmongering begin…
In a joint statement from the alphabet soup of US intel agencies (DOJ, DOD, DHS, DNI, FBI, NSA, and GSA) on ensuring the security of the 2020 elections, officials would like you to know that while there is no current evidence of any threats, “foreign malicious actors” are out there hating you for your freedom and democracy and ready to meddle…
Attorney General William Barr, Secretary of Defense Mark Esper, Acting Secretary of Homeland Security Kevin McAleenan, Acting Director of National Intelligence Joseph Maguire, FBI Director Christopher Wray, U.S. Cyber Command Commander and NSA Director Gen. Paul Nakasone, and CISA Director Christopher Krebs today released the following joint statement:
Today, dozens of states and local jurisdictions are hosting their own elections across the country and, less than a year from now Americans will go to the polls and cast their votes in the 2020 presidential election. Election security is a top priority for the United States Government. Building on our successful, whole-of-government approach to securing the 2018 elections, we have increased the level of support to state and local election officials in their efforts to protect elections. The federal government is prioritizing the sharing of threat intelligence and providing support and services that improve the security of election intelligence and providing support and services that improve the security of election infrastructure across the nation.
In an unprecedented level of coordination, the U.S. government is working with all 50 states and U.S. territories, local officials, and private sector partners to identify threats, broadly share information, and protect the democratic process. We remain firm in our commitment to quickly share timely and actionable information, provide support and services, and to defend against any threats to our democracy.
Our adversaries want to undermine our democratic institutions, influence public sentiment and affect government policies. Russia, China, Iran, and other foreign malicious actors all will seek to interfere in the voting process or influence voter perceptions.
Adversaries may try to accomplish their goals through a variety of means, including social media campaigns, directing disinformation operations or conducting disruptive or destructive cyber-attacks on state and local infrastructure.
While at this time we have no evidence of a compromise or disruption to election infrastructure that would enable adversaries to prevent voting change vote counts or disrupt the ability to tally votes, we continue to vigilantly monitor any threats to U.S. elections.
The U.S. government will defend our democracy and maintain transparency with the American public about our efforts. An informed public is a resilient public. Americans should go to trusted sources for election information, such as their state and local election officials. We encourage every American to report any suspicious activity to their local officials, the FBI, or DHS.
In past election cycles, reporting by Americans about suspicious activity provided valuable insight which has made our elections more secure. The greatest means to combat these threats is a whole-of-society effort.
In other words: be afraid, be very afraid, see something, say something – and do not question any crackdowns on your liberty and it is merely a temporary repression for your own good and to save democracy.
Tyler Durden
Tue, 11/05/2019 – 19:29 - Why Your New Jail Cell May Be Your Home
Why Your New Jail Cell May Be Your Home
A housing affordability crisis, depressed wages, insurmountable debts, and a downturn in the economy have paralyzed US homeowners as their ability to move collapses.
US homeowners in 2019 had spent an average of 13 years in their home, up from eight years in 2010, reported Redfin.
Across 55 metros Redfin analyzed, homeowners in all regions stayed in their home much longer versus 2010.
Salt Lake City, UT; Houston, TX; Fort Worth, TX; San Antonio, TX; and Dallas, TX were some of the metropolitan areas where homeowners were staying the longest as their economic mobility rotted away over the last decade or so.
Here are the top 18 cities where homeowners were staying in their homes the longest:
This means your home is your prison, and it’s possible new homeowners will be stuck in their new purchases for a much more extended period than ones before them after the next recession strikes. That is because many of the new homeowners are millennials with insurmountable debts.
It’s not just mortgage debt that will hold back millennial homeowners from moving — their student loans, auto loans, and credit card debt will also be a significant factor.
Plus, most millennials have been purchasing homes at the highest price extremes, they will have to wait for the Federal Reserve to blow up the housing bubble again before they can break even after prices fall in the next recession.
With economic mobility among all homeowners deteriorating, this is the latest example that the “greatest economy ever” is merely a hoax.
Tyler Durden
Tue, 11/05/2019 – 19:05 - Does Entire "Success" Of Democrats Depend On Keeping The American People Wildly Ignorant Of Reality?
Does Entire "Success" Of Democrats Depend On Keeping The American People Wildly Ignorant Of Reality?
Authored by JD Heyes via NaturalNews.com,
The few times in our history when Congress has either voted to impeach a president or considered returning articles of impeachment, the process was handled very publicly.
Hearings were not held in secret. Testimony was not taken behind closed doors. Witnesses and evidence were presented out in the open so the American people, through various media of the day, were well aware of what was happening.
The reasons for the openness should be obvious, but alas, they are not for far too many Americans.
First of all, allowing someone accused of criminal activity to face his or her accuser is a fundamental legal principle of our founding.
Secondly, secret trials were banned hundreds of years ago because they are the legal instruments of tyrants: Kings and dictators holding secret proceedings can present phony “evidence” in order to achieve convictions.
Third, the accused are permitted legal representation of their own so they can challenge the prosecution’s witnesses and alleged “evidence.”
None of these founding principles are being applied to the current “impeachment inquiry” involving President Donald Trump.
Democrats, led by Rep. Adam Schiff of California, are holding the inquiry behind closed doors. They are bringing in ‘witnesses’ whose testimony is being sequestered – even as Schiff has been accused of leaking the contents of some witness testimony completely out of context.
Also, no one on the president’s legal team has been able to question any of the witnesses Democrats have called in to testify. So he doesn’t know what’s being said — other than what Schiff is leaking to the “mainstream media,” which is dutifully reporting what they’ve been provided, sans corroboration.
It’s the most un-American legal process one could ever have envisioned. Worse, this is supposedly involving an impeachment process — one that, theoretically, could involve the removal of a duly elected president 63 million Americans voted for. (Related: “Ukraine” whistleblower suddenly not going to testify before Adam Schiff’s secret committee — so what’s the “impeachment inquiry” really for?)
We will rue the day we allow our country to be stolen from us
In short, nothing about this process should be held in secret. Communist countries and others who are run by dictators have secret ‘legal’ proceedings, but clearly none that would involve the leader of the country.
Democracies don’t operate that way and our unique American republic was never supposed to operate in the dark.
Granted, if the Democrat-controlled House ever does return actual articles of impeachment against President Trump, that will be conducted in the open. But knowing how secretive Democrats have been thus far, it’s a safe bet they’ll attempt to present as “evidence” the “testimony” of so-called “witnesses” who, thus far, have only appeared behind closed doors.
It’s been said that ‘impeachable offenses’ are whatever the House of Representatives say they are in order to satisfy the Constitution’s “high crimes and misdemeanors” impeachment requirement. But clearly the processes employed against Trump are partisan in nature and not based on any semblance of historical precedent.
As Americans, we can’t allow this process to be warped — by one political party and the media. The future of our country is far too important.
“President Trump is a disruptor. That makes some people very happy, and it makes some people very mad,” former UN Ambassador Nikki Haley said during a Friday speech at the American Enterprise Institute.
“But if we are a country that lives by the rule of law, we must all accept that we have one president at a time, and that president attained his office by the choice of the American people.
“No policy disagreement with him, no matter how heartfelt, justifies undermining the lawful authority that is vested in his office by the Constitution. … What’s at stake is not President Trump’s policies. What’s at stake is the Constitution,” she added.
She’s exactly right. Nothing is worth losing our country. As long as we continue to have unimpeded free elections, there is always a chance to fix things.
Tyler Durden
Tue, 11/05/2019 – 18:45 - "It's Obviously Disturbing" – Mortgage Market Reopens To Subprime Borrowers
"It's Obviously Disturbing" – Mortgage Market Reopens To Subprime Borrowers
After more than a decade since the subprime mortgage market triggered the 2008 financial meltdown, the strict lending standards placed on new homeowners post-crisis have disintegrated in the last three years.
Homebuyers with low credit scores, gig-economy jobs, and high-debt loads (sounds like millennials), can now obtain mortgages and participate in the American dream of owning a home.
Putting unqualified people back into homes is the latest example of stupidity from Wall Street, but the lack of oversight from the Federal Reserve and government.
The rapid surge of non-qualified, or non-QM bonds, is happening as cracks in the housing market have appeared. For instance, the housing price growth of major cities in the S&P CoreLogic Case-Shiller Index has stalled. Delinquency rates of these unconventional loans have also started to tick higher.
“It’s obviously disturbing this late in the cycle to see originations for these loans at the kind of level they’ve kicked up to,” Daniel Alpert, managing partner at Westwood Capital, told Bloomberg. “The housing market is not quite ready for a big infusion of this product.”
Banks, who are underwriting these unconventional loans, are doing so through weakening standards very late in an economic expansion. The expectation is that a recession could arrive as early as next year, could lead to a further tick up in delinquency rates.
The non-QM bond market is nowhere near the size of the subprime bond market of 2007/08.
“It’s not the subprime we remember from 2006 to 2007,” said Mario Rivera, managing director of the Fortress Credit Funds business, which has bought non-QM bonds. “It’s more of a second or third inning of non-QM. We’re getting the best collateral before the more aggressive lending comes in.”
Bloomberg says the size of the non-QM bond market is about $27 billion, a tiny fraction compared to the $10 trillion mortgage-bond market. Back in 2007, the subprime mortgage bond market was approximately $1.8 trillion right before it imploded.
Nonbank mortgage lenders have largely underwritten these unconventional loans, but large banks like JPMorgan Chase & Co., Credit Suisse Group AG, and Citigroup Inc. have been entering the space since 2016.
Recent non-QM borrowers have had credit scores at or below 700, many have provided income statements rather than tax returns. Fitch Ratings analysis warns non-QM borrowers are susceptible to income fluctuations.
Fitch added that non-QM bonds have a lot more safeguards than the subprime ones did in 2007.
“There’s a lot more cushion, as there should be,” said John Kerschner, head of U.S. securitized products at Janus Henderson Group Plc. “You can get some comfort that even if defaults inch up, the losses from those defaults aren’t going to be egregious.”
And while the non-QM bond market won’t lead to the next financial armageddon like what was seen a decade ago, it certainly demonstrates that Wall Street is willing to create the same financial products that led up to the last crisis.
Tyler Durden
Tue, 11/05/2019 – 18:25
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