Nov 07

Today’s News 7th November 2016

  • Here's What Happened When A Hillary-Supporting MIT Professor Decided To Analyze Her Emails…

    Submitted by Mike Krieger via Liberty Blitzkrieg blog,

    A few days ago, Cesar A. Hidalgo published a very important article titled, What I Learned From Visualizing Hillary Clinton’s Emails.

    So who is Cesar Hidalgo?

    César A. Hidalgo is associate professor of media arts and sciences at the MIT Media Lab and the author of Why Information Grows: The evolution of order from atoms to economies. He has also lead the creation of data visualization sites that have received more than 100 million views, including datausa.io, dataviva.info, atlas.media.mit.edu, immersion.media.mit.edu, pantheon.media.mit.edu, streetscore.media.mit.edu, and others (see chidalgo.com for more details).

    At this point, I’m sure you’re wondering why I’m highlighting this guy’s post two days before the Presidential election. It’s for two reasons. First, the piece offers a very good representation of the sort of peer pressure that can come down upon an academic for being seen as having the “wrong” political opinion. Second, and perhaps most important, his email visualization tool taught him that the current state of our government in these United States simply can’t achieve the best outcomes for the public at current scale (size, geographic/cultural diversity, etc).

    With all that out of the way, I’m going to highlight what I found to be the most powerful part of his piece.

    Enjoy:

    So what did we learn by making this dataset accessible?

     

    We learned a few things about what Clinton’s emails said, about how the media works, and about how people interpreted the project.

     

    We made clinton.media.mit.edu publicly available last Friday night (October 28, 2016). We launched with a single story, written by Alejandra Vargas from Univision.

     

    My intuition was that the story was likely to get picked up by other news sources. After all, the tool facilitated people’s ability to read and understand the content of these emails, and the connections of the people involved in them. But I was wrong—it has been nearly a week since we released the project and no other major news source has picked up the story, despite having been viewed by more than 300,000 people in less than a week.

     

    So how did we get so much traffic without any news coverage? The answer is social media. So far, the tool has been shared widely on Twitter, Facebook, and for a brief but intense time, on Reddit. Its spread has been fueled by different motives, and also, has been battled in different ways.

     

    Many reporters shared the news on their personal accounts understanding that the tool represents a different form of data reporting, or data journalism: one where people are provided with a tool that facilitates their ability to explore a relevant dataset, instead of being provided with a story summarizing a reporter’s description of that dataset.

     

    Another group of people that shared the news were interface designers, who understand that there is a need to improve the tabular interface of present day email clients, and that the inbox we presented in this project was an attractive new alternative.

     

    But many people also shared our site claiming that this was evidence of Clinton’s corruption, and that the site supported Trump. More on that later.

     

    But the spread of the site was not without its detractors. A few hours after we released the site I received a message from a friend telling me that what I had done was “a huge mistake” and that I should have waited to post this until “later in the year.”

     

    A few days later, outside my lab, a member of a neighboring research group called me a “Trump supporter” and told me that I should have only made that site available if it also included Trump’s emails. I told him that I would be happy to include them, but I had no access to the data. In haste, this colleague began emailing me news articles, none of which provided access to the alleged public dataset of Trump emails.

     

    Later, a friend of one of my students posted the news on Reddit, where it went viral. And I mean really viral. It became the top story of the Internetisbeautiful subreddit, and made it to Reddit’s front page. It collected more than 3,000 upvotes and 700 comments. But as the story peaked, a moderator single-handedly removed it in an authoritarian move, and justified this unilateral silencing of the post by adding a rule banning “sites that serve a political agenda or that otherwise induce drama.” Of course, the rule was added AFTER the post was removed.

    Reddit appears to be rampant with censorship these days.

    So when it comes to media, social or not, I learned that providing information directly to people so that they can inspect it and evaluate it, is a value that many people consider second to supporting their preferred electoral choice. The twist is that I don’t support Trump. In fact, I don’t support him at all. I think he is potentially a threat to global security, and also, a candidate that has shown repeatedly to be a dividing rather than unifying force. He has failed to respect contracts numerous times, defrauding contractors; and he certainly has shown little respect for people’s development by creating a fraudulent university. So I think he is ill prepared for most jobs, including a difficult one like that of being president.

     

    I support Clinton in this election, and even though I don’t get to vote (As a green card holder I just pay taxes), I want her to win next Tuesday. I really do. But I understand that this is my own personal choice, a choice that I want to make sure is informed by my ability to evaluate information about the candidates directly, and by a media that is more transparent than the one we now have. Trust me, if I had Trump’s tax records, I would also think it is a good idea to make a tool that makes them more easily digestible. But my reason to make that tool, once again, would not come from my support for Clinton, or my opposition to Trump. It would come from my support for a society where people have direct access to relevant sources of information through well-designed data visualization tools.

    Now here’s where we get into very important lessons about the future.

    So what did I learn about Clinton’s emails? One of the advantages of helping design a data visualization tool is that you get an intimate understanding of the data you are visualizing. After all, you have to explore the data and use the tool to make dozens of design decisions. In this case, the development cycle was particularly fast, but nevertheless I got to learn a few things about the data.

     

    Of course, the whole point of making this tool is that you can use it to come up with your own interpretation of the data. That said, you might be curious about mine, so I’ll share it with you too.

     

    What I saw on Clinton’s emails was not surprising to me. It involved a relatively small group of people talking about what language to use when communicating with other people. Also, it involved many unresponded-to emails. Many conversations revolved around what words to use or avoid, and what topics to focus on, or how to avoid some topics, when speaking in public or in meetings. This is not surprising to me because I’ve met many politicians in my life, including a few presidents and dozens of ministers and governors, so I know that what work means to many people in this line of work, on a daily basis, is strategizing what to say and being careful about how to say it. I am sure that if we had access to Trump’s emails we would see plenty of the same behavior.

     

    So what I got from reading some of Clinton’s email is another piece of evidence confirming my intuition that political systems scale poorly. The most influential actors on them are spending a substantial fraction of their mental capacity thinking about how to communicate, and do not have the bandwidth needed to deal with many incoming messages (the unresponded-to emails). This is not surprising considering the large number of people they interact with (although this dataset is rather small. I send 8k emails a year and receive 30k. In this dataset Clinton is sending only 2K emails a year).

     

    Our modern political world is one where a few need to interact with many, so they have no time for deep relationships?—?they physically cannot. So what we are left is with a world of first impressions and public opinion, where the choice of words matters enormously, and becomes central to the job. Yet, the chronic lack of time that comes from having a system where few people govern many, and that leads people to strategize every word, is not Clinton’s fault. It is just a bug that affects all modern political systems, which are ancient Greek democracies that were not designed to deal with hundreds of millions of people.

     

    On another note, this exercise also helped me reaffirm my belief that the best way to learn about the media is not by reading the news, but by being news. I’ve had the fortune, and misfortune, to have been news many times. This time, I honestly thought that we had a piece of content that some media channels would be interested in and that it would get picked up easily. I have many reporter friends who are enthusiastic about new forms of data journalism, and that actually have been positive and encouraging this week. So I imagined that there was a good chance that a reporter would see the site, go to his or her editor, and say: “Hey, I have an interactive data visualization of all Clinton’s emails. Can I write a story on it?” and the editor would say: “Of course, make it quick.” I don’t know if these conversations actually happened, but given the large volume of traffic our project received I would be surprised if they didn’t. I learned that the outcome was not the one I intuited.

     

    And this brings me to my final point, which is that while I support Clinton in this election, and I think Trump is a bad choice for president (a really bad one), I still think that we should work on the creation of tools that improve the ability of people to personalize scrutinize politically relevant information. I now understand that much of the U.S. media may not share that view with me, and that I think this is an important point of reflection. I hope the media takes some time to think about this on November 9 (or the week after).

     

    Also, the large number of people who were unable to interpret our tool as anything but an effort to support or oppose a political candidate?—?and that was true for both liberals and conservatives?—?speaks to me about an ineffective public sphere. And that’s something I think we should all be concerned about. This polarization is not just a cliché. It is a crippling societal condition that is expressed in the inability of people to see any merit, or any point, in opposing views. That’s a dangerous, and chronic, institutional disease that is expressed also in the inability of people to criticize their own candidates, because they fear being confused with someone their peers will interpret as a supporter of the opposing candidate. If you cannot see any merit in the candidate you oppose, even in one or two of the many points that have been made, you may have it.

     

    So that’s how this election has muddled the gears of democracy. When we cannot learn from those we oppose, or agree when they have a valid point, our learning stops. We keep on talking past each other. I know that this election has made learning from those we oppose particularly difficult, but the difficult tests are the ones that truly show us what we are really made of. These are the situations that push us to see past all of the things that we don’t like, or don’t agree on, so we can rescue a lesson. You may not agree with me, but I hope at least I gave you something to think about.

    While his points about media censorship and peer pressure are self-explanatory, I want to take a quick moment to discuss his most meaningful insight, which is the idea that “political systems scale poorly.” This is hugely important, because as the current status quo system collapses, many of us in the Western world will be presented with an incredible opportunity to do things completely different. Unfortunately, none of the candidates in the 2016 election (including Sanders and Trump) have been promoting the idea of political decentralization, which is the direction I think we need to move toward. In voting for Brexit, that’s exactly what the British people professed a preference for, and it’s what we need here in America.

    In some important ways, I think we should look back toward the original concept of government as understood by our founders. A loose-knit collection of largely self-governing states that are bonded together in certain important ways, yet independent and sovereign in all other ways. Indeed, I think we can break things up even further than that, but let’s start there for the time being.

    If we want to stick with representative democracy, I think for it to work best, it needs to be very local. I think the future of mankind depends on us getting our political systems right, and I think governance has to be shifted to the local level as much as possible.

    This all reminds me of Aldous Huxley’s extremely prescient warning in his 1958 book Brave New World revised (see my review of it), in which he wrote:

    Or take the right to vote. In principle, it is a great privilege. In practice, as recent history has repeatedly shown, the right to vote, by itself, is no guarantee of liberty. Therefore, if you wish to avoid dictatorship by referendum, break up modern society’s merely functional collectives into self-governing, voluntarily co-operating groups, capable of functioning outside the bureaucratic systems of Big Business and Big Government.

    Bottom line: We need to decentralize everything, especially government.

  • Major Quake Strikes Cushing, Oklahoma – Near US' Largest Oil Storage Facility

    Shortly after 1945 local time, a strong 5.0 magnitude earthquake struck some 50 mile northeast of Oklahmoa City. The nearby town of Cushing, home of America's largest oil storage facility, experienced structural damage and lost power.

    This was Oklahoma's 5th largest quake..

    No injuries have been reported.

     

    As Bloomberg reports, the quake struck 2km west of Cushing, Oklahoma, according to USGS.

    Cushing is location of largest oil storage site in U.S. where benchmark WTI crude futures are delivered.

    Quake at depth of 5km.

    Cushing fire officials haven’t yet received any calls for damage at the oil tank yard, and no injuries have been reported, News9 Oklahoma’s Justin Dougherty says in posting on Twitter.

    Oklahoma registered 5.6 magnitude earthquake in September, tying state record set in 2011; number of earthquakes measuring 3.0 or higher reached 890 last year.

    FOX23 reports that Payne County Emergency Management officials confirm power was cut off to Cushing following the earthquake, and The Cimarron Tower Apartments in Cushing were evacuated.

     

    For now there i sno reaction in WTI Crude…

    As a reminder, several energy producers, and also the U.S. Environmental Protection Agency, are facing lawsuits because of seismic activity allegedly linked to oilfield wastewater disposal in Oklahoma and other states

  • Doug Band Accuses Chelsea Of Using Clinton Foundation Money To Pay For Her Wedding

    A couple of days ago we shared a Podesta email from Doug Band about Chelsea talking openly in public about her “internal investigation” into the Clinton Foundation. 

    As with many of the Doug Band email chains, the rabbit hole just got a little deeper today with Band accusing of Chelsea of “using foundation resources for her wedding and life for a decade” among other accusations.  He also concludes with another veiled threat on the consequences “once we go down this road….”

    The investigation into her getting paid for campaigning, using foundation resources for her wedding and life for a decade, taxes on money from her parents….

     

    I hope that you will speak to her and end this

     

    Once we go down this road….

     

    Doug Band

     

    The implications are troubling: as our friends from the Southern Investigative Reporting Foundation point out, “*If true* people (then) worth well into 8 figures used 501c3 $ to pay for a wedding.“

    The latest Band email comes after he previously accused Chelsea of talking about her “internal investigation” in the Clinton Foundation with “one of the bush 43 kids.”

    I just received a call from a close friend of wjcs who said that cvc told one of the bush 43 kids that she is conducting an internal investigation of money within the foundation from cgi to the foundation

     

    The bush kid then told someone else who then told an operative within the republican party

     

    I have heard more and more chatter of cvc and bari talking about lots of what is going on internally to people

     

    Not smart

    Something tells us that Chelsea and Doug may not be on speaking terms for a while after all the WikiLeaks revelations.

  • Vatican Warns Of "Path Of Bloodshed" In Venezuela If Talks With Anti-Maduro Political Leaders Fail

    A few weeks ago we warned that Venezuela was on the verge of revolution after Maduro took steps to block a recall referendum that many thought would have resulted in his ouster.  In response, Maduro’s political opposition urged Venezuelans to take to the streets to protest the move which they say was tantamount to a coup.  Here’s what we wrote before:

    Once a “flagship socialist nation,” Venezuela has suffered over the past couple of years from a dramatic economic crisis that has resulted in severe shortages of food, clean water, electricity, medicines and hospital supplies all of which have resulted in a desperate population which has resorted to the black market and violence for survival.  That said, Venezuela likely inched one step closer to revolution on Friday when Maduro’s leftist government took steps to block a recall referendum that could have resulted in his ouster.  According to the US News and World Report, Venezuelan opposition leaders are calling the efforts of Maduro “a coup” in light of the broad based public support of the recall effort.

     

    Venezuela is bracing for turbulence after the socialist government blocked a presidential recall referendum in a move opposition leaders are calling a coup.

     

    The opposition is urging supporters to take to the streets, beginning with a march on a major highway Saturday led by the wives of jailed activists, while a leading government figure is calling for the arrest of high-profile government critics.

     

    Polls suggest socialist President Nicolas Maduro would lose a recall vote. But that became a moot issue on Thursday when elections officials issued an order suspending a recall signature drive a week before it was to start.

     

    “What we saw yesterday was a coup,” said former presidential candidate Henrique Capriles, who had been the leading champion of the recall effort. “We’ll remain peaceful, but we will not be taken for fools. We must defend our country.”

     

    International condemnation was swift. Twelve western hemisphere nations, including the U.S. and even leftist-run governments such as Chile and Uruguay, said in a statement Friday that the suspension of the referendum and travel restrictions on the opposition leadership affects the prospect for dialogue and finding a peaceful solution to the nation’s crisis.

    Venezuela

     

    Apparently we weren’t that far off with our “revolution” prediction as the Vatican and the Union of South American Nations were recently called in to negotiate a truce between the Venezuelan government and the opposition leaders as the situation has continued to spiral out of control.  In order to calm tensions, Maduro agreed to release a few political opposition members from prison and the opposition called off a symbolic “trial” in congress against Maduro and a street protest.  That said, as Yahoo News points out, if continued talks brokered by the Vatican fail the result could well be “bloodshed.”

    If upcoming Vatican-backed talks between Venezuela’s bitterly antagonistic government and opposition fail, the result could well be “bloodshed,” a papal envoy warned Saturday.

     

    “If one delegation or the other ends the dialogue, it’s not the pope but the Venezuelan people who will lose, because the path then could truly be one of blood,” Archbishop Claudio Maria Celli told the Argentine daily La Nacion in Rome, after visiting Caracas.

     

    -‘Very ugly’ situation –

     

    There are fears a breakdown in the talks could see a return of street confrontations between anti-Maduro protesters and security forces, and possibly an escalation into outright violence.

     

    “There are people who aren’t afraid to see bloodshed. This is what worries me,” Celli told the newspaper.

     

    He said Pope Francis was playing a “strong role” in the talks.

     

    “We are running a risk,” he admitted. “We will see. May God help us.”

    That said, there are already signs that talks between Maduro and his opposition are breaking down as opposition leaders have demanded the release of more “political prisoners” while Maduro has shot back: “There can be no ultimatums.”  Given the extreme economic crisis in Venezuela that has resulted in severe food shortages, hyperinflation and so forth, we’re not sure that Venezuelans will be willing to maintain the Vatican’s truce much longer without some meaningful concessions from Maduro’s leftist government.

  • The TRUTH about REDNECKS in America and in Politics

    Redneck culture doesn’t get much attention – until now.  That’s because that generally they stick to themselves, don’t participate in the mainstream, and don’t come to town too often.  As we explain in our best selling book Splitting Pennies – the world isn’t as it seems.  Rednecks don’t rule the world, but – from time to time they do get their moment of glory.  There’s no better metaphor to understand Politics than with than Rednecks.  You know there’s an old expression, you can take the kid out of the city but you can’t take the city out of the kid.  In the south they say ‘born and bred’ whatever that means.  Let’s take 2 significant Redneck political examples as ‘rich Rednecks’ who popularized Redneck culture in politics; Bill Clinton, and Lee Atwater.  First let’s hear from Bill Clinton in his full backwoods accent:

    You know, if you played this for any Southerner, and didn’t tell them it was “Bill Clinton” speaking, they’d think he was one of they own!  Spoken like a true Southerner.  But we’ve been convinced, that Bill Clinton is a guy with a high IQ, a Rhodes scholar.. a ‘genius.’  Well he certainly is a good ol’ boy.  Just google a few keywords about Bill such as “Clinton Body Count” and “Clinton Drugs Arkansas Importation” just to name a few.  Sadly, Bill grew up in a typical Redneck environment, from Wikipedia:

    He was the son of William Jefferson Blythe Jr. (1910–1946), a traveling salesman who had died in an automobile accident three months before his birth, and Virginia Dell Cassidy (1923–1994). His parents had been married on 4 September 1943, but this later proved to be bigamous, as Blythe was still married to a previous wife…Clinton says he remembers his stepfather as a gambler and an alcoholic who regularly abused his mother and half-brother, Roger Clinton Jr., to the point where he intervened multiple times with the threat of violence to protect them…

    The next significant Redneck in American politics, is Lee Atwater – you can say he is the inventor of dirtball politics.  Slumbag politics.  Negative campaign ads.  Before Lee’s aggressive campaigns against Democrats, such a thing didn’t exist.  If you really want to understand how our modern political system works, THIS IS A MUST WATCH: Boogie Man: The Lee Atwater Story

    So, in some way, the current election really is based on a Redneck ideaology.  Lee Atwater wasn’t just a Redneck, he was Openly Redneck.  He wasn’t like Bill Clinton, trying to act like something he’s not.   

    The Clinton campaign is using Lee’s dirty tricks right out of his Redneck playbook but they’ve taken it to a whole new level.  So it’s a little ironic when Bill is teasing that Trump supporters are a bunch of Rednecks.  Well this is partially true, but with 94 Million Americans ‘out of the workforce’ who can blame them.  Many Rednecks were not born Rednecks, they became so by years of being disenfranchised by the mainstream, for one reason or another.  One sad Redneck demographic are War Vets, who don’t get the treatment they need for their disability being exposed to the cocktail of Military grade chemical weapons, radiation, and other exposure they have during wartime.  

    Another bright example of the Redneck connection to politics is the Redneckary of George Dubya – the Bushes are from Connecticut.  They have yachts.  GW graduated from Yale.  Lee taught them well.  So GW bought a Texas ranch, a pickup truck, and learned how to shoot a gun.  And he took to the Redneck culture real well (‘Specially Drankan!).  By the time it came to vote, GW had a landslide in the Red states.  

    It’s still unknown how many Rednecks will come out of the woods and vote for Trump.  But it looks like – it will be many!  Remember, they don’t participate in polls, so there’s no data on their behavior.  They have TVs mostly, but it’s only to watch Wrastlin’ (that is, WWF).  

    The Truth is that Rednecks don’t often participate and they certainly aren’t the mainstream.  But when they do it, they do it big.  They ‘Git R Done’.  And in the case of Lee Atwater, they do know how to swing an election.  This election, they clearly support Trump.  However, the mainstream establishment is pulling out all the stops, even asking illegals to vote.  If the story of Redneck Bill Clinton teaches us one thing – don’t bet against a Redneck!  The South Will Rise Again!

    Checkout our series on Redneck Investin’ Redneck Investin Part 2 – The evolved Redneck – READ before RIOT | Zero Hedge  and Redneck Investin Part 1 – A look from the other side | Zero Hedge

    For a full edumacation explainin what is muny and how you can get lots of it, without selling cans, checkout Splitting Pennies – Understanding Forex.  

  • Wikileaks Releases 8,200 Emails From DNC Hack; Reveals Collusion Between CNN And Democrats

    With Wikileaks releasing what may have been the final 2,073 Podesta emails in part 32 of its ongoing dump of hacked campaign chairman emails, with the dramatic discoveries over the past week largely overshadowed by the FBI “scandal” which has now fully blown over after Director Comey first zigged, announcing in a cryptic statement he was reopening a probe into Clinton’s email server last Friday, only to zag just 9 days later when the FBI reported it had found nothing material in the 650,000 emails found on Anthony Weiner’s laptop, the whistleblower organization appeared to have run out of steam.

    However moments ago, Wikileaks announced the release of another huge batch of hacked DNC emails, which it dubbed #DNCLeak2, contained some 8,263 previously unseen, hacked DNC emails – a server penetration which had previously been attributed either to the Guccifer 2.0 hacker, or Vladimir Putin, and which over the summer cost Debbie Wasserman Schultz her job when it was revealed that the DNC was rigging the primary in HIllary’s favor – going public for the first time.

    While we expect the FBI to fully parse, scan and finalize it report on this batch within the next 10 or so minutes, and to conclude there is nothing of significance in the pile, we will as usual try to find anything particularly relevant, although if the Podesta emails – which provided an explicit admission by an internal review of the Clinton Foundation that it was breaking the law on at least one occasion, and that Teneo, CGI and the CF were operated as “political organizations”, meant to boost “pay to play” – failed to get an indictment out of the FBI, we truly doubt that anything that is contained in tonight’s 8,000 emails will sway the so-called law enforcement authorities into action.

    As usual, readers are warmly invited to submit any material discoveries our way at the usual address.

    * * *

    In an April 2016 email from DNC research director Lauren Dillon, we find that CNN’s Wolf Blitzer had tasked the DNC with coming up with questions for his interview of Donald Trump:

    Wolf Blitzer is interviewing Trump on Tues ahead of his foreign policy address on Wed.

     

    Please send me thoughts by 10:30 AM tomorrow.

     

    Thanks!

    The DNC was quick to oblige, even if ultimately the interview ended up getting cancelled.

    * * *

    Also in April 2016, Dillon was tasked by CNN to come up with questions, only this time for Ted Cruz and Carly Fiorina:

    * * *

    An email from May 2016, shows yet another instance of the DNC creating and approving a fake Craigslist ad seeking to mock Donald Trump.

    The DNC’s outside councel at Perkins Coie was not particularly impressed the ideas, with lawyer Jacquelyn Lopez noting that “the defamation risk here is too high. I know we are going for a parody, but given the content of the post (his private business practices, sexual harassment, etc) we would open ourselves up to a defamation suit if we posted.“

    That however did not ruin the DNC’s enthusiasm:

    Apparently Graham took this all the way to Marc, and he said no. So if we do this, we need to get Amy and Lindsey to agree that we’re ok with the possibility of getting sued.

    * * *

    Jackie said to Cate “if you think getting sued would be awesome publicity and Amy and Lindsey are willing to go there, then let’s talk, but…”

    * * *

    Rapid team has signed off, we just need to decide within this group IF we want to take this to lindsey / amy / luis

    * * *

    If we have a likelihood of getting sued I need to look at it closely too if you want to move forward.

     

    You can take it to them first to decide and if they say no that will save me time but I may end up making edits – or I may not – before it actually goes out.

     

    My team if great as you know but I lawsuit should be on my shoulders.

    Ultimately, it is unclear if the DNC ended up running the mocking Craig’s List ad.

    * * *

    Last but not least, a May 2016 DNC email reveals the culprit behind Donald Trump’s exorbitant tax loopholes. And it is, drumroll, William Jefferson Clinton.

  • Meet The Million Dollar Donors (Spoiler Alert: They Are "With Her")

    Submitted by Mike Krieger via Liberty Blitzkrieg blog,

    A few days ago the Wall Street Journal published a very powerful piece titled, The Million-Dollar Donors. What you’ll see should sufficiently dash any and all fantasies that Hillary Clinton is for the average person.

    Here are a few of the graphics:

    screen-shot-2016-11-05-at-12-31-00-pm

     

    screen-shot-2016-11-05-at-12-31-14-pm

     

    screen-shot-2016-11-05-at-12-31-29-pm

    For additional graphics and more detailed information, click here.

    So are you ready?

    screen-shot-2016-11-05-at-12-33-54-pm

  • Doug Noland Interview: "In The Next Crisis The Fed's Balance Sheet Will Hit $10 Trillion"

    The global bubble that central banks have kept afloat for the past eight years, based on sovereign and government debt, as well as central bank credit, runs right to the heart of the monetary system. That, according to Doug Noland, means we are in for a bigger crash and deeper dislocation when it all comes to an end, and Noland has a good idea which will be the first central bank to crack.

    Doug Noland of McAlvany Wealth Management has a long history in the hedge fund industry as a short seller, having worked with Gordon Ringoen and Bill Fleckenstein among others, but is perhaps best known for his ability to spot bubbles ahead of the crowd.

    Studying credit data, he was initially concerned about the balance sheet expansion of Freddie and Fannie in the early 90s and started writing about the mortgage finance bubble in 2002. He also called the government finance bubble in April 2009.

    In an interview with Real Vision TV, Noland said the current market bubble is a dangerous place to be and there has been a major shift from previous boom bust scenarios, where the impact has been more limited. He also examines how support from central banks has led the markets to ignore the risk – and what happens when that support is taken away.

     

    Deeply Systemic Bubble – Consequences Unknown

    “This bubble is deeply systemic,” he said “I thought the bubble burst in ’08. I thought we were going into another depression. I wrote as much. Well, in early ’09, I had to come out and say– I started warning about the potential for what I called back in, I think it was April 2009, the global government finance bubble.

    “I think we’re late, but this is a different type of a bubble because it’s global. Very different dynamics. The other thing is it’s gone to the heart of money and credit. Right now this bubble is being fed by government debt, sovereign debt, and central bank credit. Back when WorldCom debt and Telecom debt was driving the technology bubble, in my mind that can only go on so long. People will have enough of that junk debt and that will end that cycle.

    “The mortgage finance bubble was a little different. That was more money-like. Moneyness of credit is a term I used during that period. People had insatiable demand for GSE credit, insatiable demand for AAA rated mortgage backed securities. That bubble could go much longer, as it did, go longer, have a much deeper impact on economic structure.

    “This bubble, again, it’s gone to the heart and soul of money and credit. And right now central bankers are basically doing everything to keep it going. So this one, we’re what, eight years into it? I think we’re really late, but we don’t know to what extent central bankers will continue to try to sustain the backdrop.”

    * * *

    Which Central Bank Domino Will Fall First

    Although the markets are ignoring the risk and continuing to move higher, cracks are starting to appear in the global environment, Noland said. As stresses and strains become evident among central banks, the discussion is turning to which will be the first of the dominos to fall, because the greater concern is that once faith goes in one central bank, the ripple effect will be fast and fatal.

    “There’s a lot of complacency here in this country because the Fed postponed its QE, and the bull market just continued and everything looked fine,” Noland said. “Well part of the reason they were able to do that is because of the massive QE globally and the flow of finance into the US from QE abroad.

    “But right now, it seems like the Bank of Japan is in the crosshairs. They’ve tried to devalue their currency, that didn’t work. Their latest spin is to try to manipulate their yield curve, and that certainly hasn’t worked so far. So I think the Bank of Japan is in the forefront of a credibility crisis. I think in Europe, the ECB is only one step behind. Their QE has certainly destabilized finance throughout Europe and is playing a major role in the European bank issues right now.

    * * *

    Danger, Desperation and a $10 Trillion Balance Sheet

    All the policy measures in play now are reactive, with helicopter money and fiscal stimulus the latest ideas on the table and we’re now hearing the Fed wants the ability to buy equities. With the Fed looking at a balance sheet of around $10 trillion, Nolan said things are starting to look desperate.

    “I’ve often contemplated the size of the Fed’s balance sheet, and I don’t think $10 trillion is ridiculous,” he said. “I said that before and it sounded outrageous. I think the next crisis, the next serious de-risk and de-leveraging, the Fed’s balance sheet is going to probably have to double again. Larry Summers was out also saying there’s a role for buying– continuous buying of stocks and corporate debt by central bankers. Yeah. They’re desperate. It’s a global bubble. And the markets believe they’ll do anything to keep it going, and that’s just a very dangerous place to be.“

    * * *

    Markets Believe Central Banks Will Save Them but Cracks Mean Caution

    Markets are convinced that central bankers will not allow an institution like Deutsche Bank to fail, Noland said, but indications of stress can be seen in the currency swaps market. “You don’t hardly even see it in Deutsche Bank senior CDS because the perception is there’s no way they’re going to allow this,” he said. “Their CoCo bonds and some of the more mezzanine debt, yeah, that’s under pressure. But in the market there is confidence that they will not allow a crisis with that institution.”

    “To me there are enough cracks out there, there are enough cracks to be extremely cautious. For me, I would not be exposed to global securities markets, I would not be. We’re in the environment now where to survive, people have had to ignore risk. And they’re ignoring it today as much as ever. I don’t want to be in that situation because the risks are so high. I don’t want to be in the market when everyone else comes to realize, recognize that there are risks.”

    * * *

    The Short Opportunity of a Lifetime

    For now, Noland is in the process of putting together a new venture with David McAlvany, which he said is exciting and because he thinks “this is the opportunity of a lifetime on the short side. But I’m happy to be watching from the sidelines right now,” he said, with some ferocious tops in chaotic markets.

    “I think it’s time to be risk averse. I’m a big fan of the precious metals, I think they’re investable. To me, marketable securities, they’re not investable to me because I don’t know what the risk is. And I know the market wants to ignore the risk. What do we do if central bankers back away? What is the risk profile for economies, for the financial markets?

    “I was very concerned back in 2007. I was very concerned with the consequences of this bubble imploding. I’m much more worried today. In 2007, I wasn’t worried about the world. I wasn’t worried about geopolitical. And I never want to be part of the lunatic fringe, but if people aren’t concerned about geopolitics right now, they’re not paying attention.

    * * *

    A Destructive Bubble Squandering Wealth

    When this particular episode ends and people really understand how much money has been spent propping up a broken system, the divisions in society and mistrust of governments evident in the past year could move to more extreme levels.

    “For me, bubbles are always about a redistribution and a destruction of wealth. During the bubble, there is perceived wealth that keeps the system inflating. People believe there’s all this wealth and securities and asset prices, etc. And they find out when the bubble bursts that a lot of that wealth was actually squandered. The problem with this global government finance bubble– we’ll call it that– is this is a redistribution of wealth globally.

    “And this is not going to sit well. Right now, global central bankers are all working together to try to keep the global financial system liquid, levitated. Politicians generally are cooperating, but you can see society starting to fray here. This is not working right. This is archaic, but this is the consequence of unsound money. History tells us this, right? Society here in the US, people don’t trust their institutions, they don’t trust their politicians, they don’t trust Wall Street, they don’t trust the banks. That’s not a good place to be.”

    Watch the full interview on Real Vision TV, one of the best sources of in-depth interviews with many of the worlds most respected investors, analysts, investment strategists and geopolitical analysts.  No ads, no bias, no bullshit.  Try it free for 7 days.

  • Goldman Spots Odd "Asymmetry" In Chinese Yuan Fixing As Outflows Accelerate

    Starting in early June, when Goldman’s FX team unveiled the Yuan doom loop…

     

     

    … the bank has been esecially bearish on the Chinese currency, a trade reco with which the investment bank has been surprisingly on the money.

    And with Chinese FX data which is expected to show an acceleration in capital outflows on deck, the market’s attention will be increasingly more focused on the Yuan. Which brings us to the latest note by Goldman’s FX team, in which we find that Robin Brooks et al appears to have discovered a curious “asymmetry.”

    Here is Goldman’s explanation of what it uncovered:

    We have spent recent weeks modeling the fixing mechanism for $/CNY. In the process, we uncovered meaningful asymmetry, meaning that the RMB does not reverse declines made on Dollar strength when the Dollar weakens. This episode of Dollar weakness is a case in point, with the CFETS basket resuming its fall after a period of stability (Exhibit 4). Even beyond the trade-weighted decline in the RMB, we have argued that a rising USD makes things difficult for China, because it means that $/CNY has to fix higher (Exhibit 5), which carries the risk of accelerating capital flight. Hedging costs for RMB downside have pulled back, offering a compelling entry point should Dollar strength resume on a Clinton win.

     

    And some more details:

    We often encounter the view that the RMB is asymmetric, by which people mean that the currency weakens when the Dollar appreciates, but doesn’t commensurately strengthen when the greenback weakens. Intuitively, the fact that the CFETS basket has fallen around 10 percent while the Dollar has been stuck in a range means that this is true almost by definition. This FX Views test for this asymmetry evaluates how severe it is currently, and tracks how it has evolved over time. We find that the response in $/CNY fixings became asymmetric in the direction of RMB weaker from March of this year, but has shown signs of abating recently. In a way, our results are statistical proof of a “bias to depreciate,” which we see as supportive of our shift to a more bearish RMB view this summer, after being more-constructive-than-consensus early this year. We continue to think that hedging RMB weakness is attractive, even with forwards moving to price a bit more depreciation.

    Finally, in light of the recent exposure of Chinese capital flight which as calculated by GS was some 3 times greater than the official number, Barclays expects a significant drop in FX reserve when the latest official Chinese FX reserve number is announced shortly, confirming that China’s capital flight is accelerating notably.

    USDCNY came close to breaching 6.80 on USD strength. We think the pullback will be short lived and, as likely to be revealed in FX reserves data over coming days, capital outflows will put further pressure on the CNY. Much will depend on the USD, but assuming that the USD continues to appreciate in the months ahead, China’s referencing of the CNY NEER basket implies more potential upside for USDCNY and USDCNH

    A reminder of what China’s FX reserves look like:

Digest powered by RSS Digest