Nov 07

Today’s News 7th November 2018

  • Iran's 'Ghost Ships' Evade Oil Sanctions By Turning Off Trackers

    In anticipation of the US sanctions against Iranian oil exports, which were reimposed by the Trump Administration on Monday (along with additional sanctions on everything from Iranian shipping to banking and insurance), oil tankers bearing the Iranian flag have embraced a stealthy approach to keeping the oil flowing: They’re ‘ghosting’ international trackers by turning off their transponders, rendering the ships impossible to track by anything aside from visual cues.

    Iranian

    Iran, which is already suffering from a drop in exports to 1.8 million barrels per day, down from 2.8 million barrels at the peak, is doing everything it can to keep the crude (along with 300,000 barrels of condensate) flowing. Though Iran received a temporary reprieve from the Trump Administration’s sanctions waivers granted to eight of its biggest customers, those waivers are temporary, and they were also granted with the understanding that the applicants would gradually reduce their reliance on Iranian oil.

    That means the kingdom is going to need to do everything it can to help any and all customers avoid detection, and possible US sanctions (which could include barring a given country’s largest banks from accessing dollars and the global dollar-based financial system). Already, the ghosting method is proving surprisingly effective: In an interview with Sputnik, the founders of one of the most popular oil-tanker tracking services, tankertracker.com, have been “utterly exhausted” trying to track Iranian ships.

    “It’s the first time I’ve seen a blanket black-out. It’s very unique,” said TankerTrackers co-founder Samir Madani.

    “Iran has around 30 vessels in the Gulf area, so the past 10 days have been very tricky, but it hasn’t slowed us down. We are keeping watch visually,” said co-founder Lisa Ward.

    Meanwhile, the “special purpose vehicle” – a kind of SWIFT alternative designed explicitly to help European companies avoid detection by the US – is helping to facilitate clandestine payments for Iranian crude, eliminating another methodology for tracking who, exactly, is buying Iranian crude. Iranian president Hassan Rouhani has said Iran will defy US sanctions, though both sides have insisted that they remain “open” to negotiations surrounding a new deal.

    Iran has also employed another strategy from the pre-Iran deal era. The Republica is keeping six ships with a total capacity of 11 million barrels anchored offshore, allowing the “floating storage tankers” to make speedy deliveries to try and mitigate buyers’ anxieties as, once they leave port, the ships will be essentially impossible to track.

  • The Unraveling Of The Netanyahu Project For The Middle East

    Authored by Alastair Crooke via The Strategic Culture Foundation,

    Nahum Barnea, a leading Israeli commentator, writing in Yedioth Ahronoth in May (in Hebrew), set out, unambiguously, the ‘deal’ behind Trump’s Middle East policy:

    In the wake of the US exit from JCPOA [which occurred on 8 May], Trump, Barnea wrote, will threaten a rain of ‘fire and fury’ onto Tehran … whilst Putin is expected to restrain Iran from attacking Israel using Syrian territory, thus leaving Netanyahu free to set new ‘rules of the game’ by which the Israel may attack and destroy Iranian forces anywhere in Syria (and not just in the border area, as earlier agreed) when it wishes, without fear of retaliation.

    This represented one level to the Netanyahu strategy: Iranian restraint, plus Russian acquiescence to coordinated Israeli air operations over Syria.

     “There is only one thing that isn’t clear [concerning this deal]”, a senior Israeli Defence official closest to Netanyahu, told Ben Caspit, “that is, who works for whom? Does Netanyahu work for Trump, or is President Trump at the service of Netanyahu … From the outside … it looks like the two men are perfectly in sync. From the inside, this seems even more so: This kind of cooperation … sometimes makes it seem as if they are actually just one single, large office”.

    There has been, from the outset, a second level, too:

    This entire ‘inverted pyramid’ of Middle East engineering had, as its single point of departure, Mohammed bin Salman (MbS).

    It was Jared Kushner, the Washington Post reports, who “championed Mohammed as a reformer poised to usher the ultraconservative, oil-rich monarchy into modernity. Kushner privately argued for months, last year, that Mohammed would be key to crafting a Middle East peace plan, and that with the prince’s blessing, much of the Arab world would follow”. It was Kushner, the Post continued, “who pushed his father-in-law to make his first foreign trip as president to Riyadh, against objections from then-Secretary of State Rex Tillerson – and warnings from Defense Secretary Jim Mattis”.

    Well, now MbS has, in one form or another, been implicated in the Khashoggi murder.  Bruce Riedel of Brookings, a longtime Saudi observer and former senior CIA & US defence official, notes, “for the first time in 50 years, the kingdom has become a force for instability” (rather than stability in the region), and suggests that there is an element  of ‘buyer’s remorse’ now evident in parts of Washington.

    The ‘seamless office process’ to which the Israeli official referred with Caspit, is known as ‘stovepiping’, which is when a foreign state’s policy advocacy and intelligence are passed straight to a President’s ear – omitting official Washington from the ‘loop’; by-passing any US oversight; and removing the opportunity for officials to advise on its content.  Well, this has now resulted in the Khashoggi strategic blunder.  And this, of course, comes in the wake of earlier strategic ‘mistakes’: the Yemen war, the siege of Qatar, the Hariri abduction, the Ritz-Carlton princely shakedowns.

    To remedy this lacuna, an ‘uncle’ (Prince Ahmad bin Abdel Aziz) has been dispatched from exile in the West to Riyadh (with security guarantees from the US and UK intelligences services) to bring order into these unruly affairs, and to institute some checks and balances into the MbS coterie of advisers, so as to prevent further impetuous ‘mistakes’.  It seems too, that the US Congress wants the Yemen war, which Prince Ahmad consistently has opposed (as he opposed MbS elevation as Crown Prince), stopped. (General Mattis has called for a ceasefire within 30 days.) It is a step toward repairing the Kingdom’s image.

    MbS remains – for now – as Crown Prince. President Sisi and Prime Minister Netanyahu both have expressed their support for MbS and “as U.S. officials contemplate a more robust response [to the Khashoggi killing], Kushner has emphasized the importance of the U.S.-Saudi alliance in the region”, the Washington Post reports. MbS’ Uncle (who as a son of King Abdel Aziz, under the traditional succession system, would be himself in line for the throne), no doubt hopes to try to undo some of the damage done to the standing of the al-Saud family, and to that of the Kingdom.  Will he succeed?  Will MbS accede now to Ahmad unscrambling the very centralisation of power that made MbS so many enemies, in the first place, to achieve it?  Has the al-Saud family the will, or are they too disconcerted by events?

    And might President Erdogan throw more wrenches into this delicate process by further leaking evidence Turkey has, if Washington does not attend sufficiently to his demands.  Erdogan seems ready to pitch for the return of Ottoman leadership for the Sunni world, and likely still holds some high-value cards up his sleeve (such as intercepts of phone calls between the murder cell and Riyadh).  These cards though are devaluing as the news cycle shifts to the US mid-terms.

    Time will tell, but it is this nexus of uncertain dynamics to which Bruce Reidel refers, when he talks of ‘instability’ in Saudi Arabia.  The question posed here, though, is how might these events affect Netanyahu’s and MbS’ ‘war’ on Iran?

    May 2018 now seems a distant era.  Trump is still the same ‘Trump’, but Putin is not the same Putin. The Russian Defence Establishment has weighed in with their President to express their displeasure at Israeli air strikes on Syria – purportedly targeting Iranian forces in Syria.  The Russian Defence Ministry too, has enveloped Syria in a belt of missiles and electronic disabling systems across the Syrian airspace. Politically, the situation has changed too: Germany and France have joined the Astana Process for Syria. Europe wants Syrian refugees to return home, and that translates into Europe demanding stability in Syria. Some Gulf States too, have tentatively begun normalising with the Syrian state.

    The Americans are still in Syria; but a newly invigorated Erdogan (after the release of the US pastor, and with all the Khashoggi cards, produced by Turkish intelligence, in his pocket), intends to crush the Kurdish project in north and eastern Syria, espoused by Israel and the US.  MbS, who was funding this project, on behalf of US and Israel, will cease his involvement (as a part of the demands made by Erdogan over the Khashoggi murder). Washington too wants the Yemen war, which was intended to serve as Iran’s ‘quagmire’, to end forthwith.  And Washington wants the attrition of Qatar to stop, too.

    These represent major unravelings of the Netanyahu project for the Middle East, but most significant are two further setbacks:

    First, the loss of Netanyahu’s and MbS’ stovepipe to Trump, via Jared Kushner, by-passing all America’s own system of ‘checks and balances’.  The Kushner ‘stovepipe’ neither forewarned Washington of coming ‘mistakes’, nor was Kushner able to prevent them. Both Congress and the Intelligences Services of the US and UK are already elbowing into these affairs.  They are not MbS fans.  It is no secret that Prince Mohamed bin Naif was their man (he is still under ‘palace arrest’).

    Trump will still hope to continue his ‘Iran project’ and his Deal of the Century between Israel and the Palestinians (led nominally by Saudi Arabia herding together the Sunni world, behind it).  Trump does not seek war with Iran, but rather is convinced of a popular uprising in Iran that will topple the state. 

    And the second setback is that Prince Ahmad’s clear objective must be other than this – instability in, or conflict with, Iran.  His is to restore the family’s standing, and to recoup something of its leadership credentials in the Sunni world, which has been shredded by the war in Yemen – and is now under direct neo-Ottoman challenge from Turkey.  The al-Saud family, one may surmise, will have no appetite to replace one disastrous and costly war (Yemen), with another – an even greater conflict, with its large and powerful neighbor, Iran.  It makes no sense now.  Perhaps this is why we see signs of Israel rushing to hurry Arab state normalisation – even absent any amelioration for the Palestinians.

    Nehum Barnea presciently noted in his May article in Yediot Ahoronot:

    “Trump could have declared a US withdrawal [from the JCPOA], and made do with that. But under the influence of Netanyahu and of his new team, he chose to go one step further. The economic sanctions on Iran will be much tighter, beyond what they were, before the nuclear agreement was signed. “Hit them in their pockets”, Netanyahu advised Trump: “if you hit them in their pockets, they will choke; and when they choke, they will throw out the ayatollahs””.

    This was another bit of ‘stovepiped’ advice passed directly to the US President. 

    His officials might have warned him that it was fantasy.  There is no example of sanctions alone having toppled a state; and whilst the US can use its claim of judicial hegemony as an enforcement mechanism, the US has effectively isolated itself in sanctioning Iran: Europe wants no further insecurity. It wants no more refugees heading to Europe. Was it Trump’s tough stance that brought Kim to the table?  Or, perhaps contrarily, might Kim have seen a meeting with Trump simply as the price that he had to pay in order to advance Korean re-unification?  Was Trump warned that Iran would suffer economic pain, but that it would nonetheless persevere, in spite of sanctions? No – well, that’s the problem inherent in listening principally to ‘stovepipes’.

  • Bonds Jump, Dollar Dumps After Dems Win House

    US equity futures are fading off earlier highs, bond yields are tumbling along with the dollar after several media outlets have called the House for Democrats (while Republicans maintain control of the Senate).

    It was quite a roller-coaster for the dollar but it’s been a one-way-street lower since the odds of a Dem House triggered the calls…

     

    And as the dollar fades, safe-haven buying in bonds and gold is evident…

     

    For now S&P futures are still green but clinging to a critical support level at the 200DMA

    Still a long way to go until the cash market open tomorrow in New York.

  • "Flashpoint For War": U.S. And Japan Plan Military Response To Chinese Incursions Of Disputed Islands

    Things are again rapidly heating up in the East China Sea amidst already heightened tensions in a region where Washington is increasingly asserting the right of navigation in international waters against broad Chinese claims and seeking to defend the territorial possessions of its allies. 

    According to a bombshell new Reuters report the tiny and rocky Senkaku Islands which lie between northern Taiwan and the Japanese home islands are “rapidly turning into a flashpoint for war”. Alarmingly, Japanese government sources have been quoted as saying Tokyo and the United States are drawing up an operations plan for an allied military response to Chinese threats to the disputed Senkaku Islands. 

    The Senkaku Islands, historically claimed by both Japan and China.

    From nearly the start of his entering the White House, President Trump has said he’s committed to upholding Article 5 of the US-Japan security treaty signed the post-war years of the mid-20th century: “We are committed to the security of Japan and all areas under its administrative control and to further strengthening our very crucial alliance,” Trump had promised from the first official reception of Japanese Prime Minister Shinzo Abe back in February 2017, and since consistently maintained. 

    Japanese government sources have told regional media that the joint plan of response with the United States involves “how to respond in the event of an emergency on or around the uninhabited islands in the East China Sea” — which is set to be completed by next march, according to the statements. 

    Beijing claims the islands as part of its historical inheritance — as it does neighbouring Taiwan, despite failing to seize the protectorate during the Chinese Civil War.

    Taiwan, however, was a Japanese protectorate before World War II.

    It’s a messy historical scenario, thought resolved through United Nations conventions and treaties established after the conflict. — Reuters/news.com.au

    The Japan Times reports that “The plan being drawn up assumes such emergencies as armed Chinese fishermen landing on the islands, and Japan’s Self-Defense Forces needing to be mobilized after the situation exceeds the capacity of the police to respond.”

    The situation is now taking on a greater urgency as both the US and Japan participate in the two nations’ largest ever join war games, which involves the nuclear-powered USS Ronald Reagan aircraft carrier. The exercise, called Keen Sword began on Monday and is set to run through Thursday, and involved a combined force of 57,000 sailors, airmen and marines — with Japan contributing 47,000 of those military personnel. Canadian warships are also involved in the exercises. 

    Japan is seeking greater direct commitment and resolve on the part of the United States to defend its territorial claims against Chinese encroachment, which Japan says is already beginning to happen through informal provocative raids of fishing boats organized by Beijing. 

    Reuters reports that “ongoing aggressive incursions by Chinese fishing boats — organised as a state militia — and a freshly militarized coast guard has seen tensions in the East China Sea flare.” And the report further confirms: “The plan being drawn up assumes such emergencies as armed Chinese fishermen landing on the islands, and Japan’s Self-Defense Forces needing to be mobilized after the situation exceeds the capacity of the police to respond.”

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    Though the United States has in the past expressed deep reluctance on outright defending claims to the Japan-administered islands (indicating it will take no official position on the issue), which China calls the Diaoyu, Japan’s Self-Defense Forces says the focus of talks with the US has involved how to incorporate the US military’s strike capabilities in any potential Chinese invasion of the Senkaku Islands scenario. 

    One Japanese military analyst was quoted as saying: “Given that military organizations always need to assume the worst possible situation, it is natural for the two countries to work on this kind of plan against China.”

    The two already have a framework for such talks based on recently created 2015 defense guidelines known ans the Bilateral Planning Mechanism, or BPM. It stipulates the US and Japan’s Self-Defense Forces will “conduct bilateral operations to counter ground attacks against Japan by ground, air, maritime, or amphibious forces”. Currently there’s a similar contingency plan in place for a potential emergency threat on the Korean peninsula.

    Between now and the spring – when the plan is set to be finalized and agreed upon – China will likely ramp up its incursions on the islands, or just seize them altogether before US commitments can be firmed up, in which case the great unknown will be whether the United States actually steps up to come to Japan’s aid while risking war with China — something that up until now has been carefully avoided.

  • Are You One Of Those 'End-Of-The-World' Guys?

    Authored by Jeff Thomas via InternationalMan.com,

    Periodically, I’ll encounter someone who has read one of my essays and has decided not to pursue them further, stating, “You’re one of those ‘End of the world’ guys. I can’t be bothered reading the writings of someone who thinks we’re all doomed. I have a more positive outlook than that.”

    In actual fact, I agree entirely with his latter two comments. I can’t be bothered reading the thoughts of a writer who says we’re all doomed, either. I, too, have a more positive outlook than that.

    My one discrepancy with such comments is that I don’t by any means think that the present state of events will lead to the end of the world, as he assumes.

    But then, neither am I naïve enough to think that if I just hope for the best, the powers that be will cease to be parasitical and predatory out of sympathy for me. They will not.

    For any serious student of history, one of the great realisations that occurs at some point is that governments are inherently controlling by nature. The more control they have, the more they desire and the more they pursue. After all, governments actually produce nothing. They exist solely upon what they can extract from the people they rule over. Therefore, their personal success is not measured by how well they serve their people, it’s measured by how much they can extractfrom the people.

    And so, it’s a given that all governments will pursue ever-greater levels of power over their minions up to and including the point of total dominance.

    It should be said that, on rare occasions, a people will rise up and create a governmental system in which the rights of the individual are paramount. This was true in the creation of the Athenian Republic and the American Constitution, and even the British Magna Carta.

    However, these events are quite rare in history and, worse, as soon as they take place, those who gain power do their best to diminish the newly-gained freedoms.

    Such freedoms can almost never be destroyed quickly, but, over time and “by slow operations,” as Thomas Jefferson was fond of saying, governments can be counted on to eventually destroy all freedoms.

    We’re passing through a period in history in which the process of removing freedoms is nearing completion in many of the world’s foremost jurisdictions. The EU and US, in particular, are leading the way in this effort.

    Consequently, it shouldn’t be surprising that some predict “the end of the world.” But, they couldn’t be more incorrect.

    Surely, in 1789, the more productive people of France may have felt that the developing French Revolution would culminate in Armageddon. Similarly, in 1917, those who created prosperity in Russia may well have wanted to throw up their hands as the Bolsheviks seized power from the Romanovs.

    Whenever a deterioration in rule is underway, as it is once again now, the observer has three choices:

    Declare the End of the World

    There are many people, worldwide, but particularly in the centres of the present deterioration – the EU and US – who feel that, since the situation in their home country is nearing collapse, the entire world must also be falling apart. This is not only a very myopic viewpoint, it’s also quite inaccurate. At any point in civilization in the past 2000 years or more, there have alwaysbeen empires that were collapsing due to intolerable governmental dominance and there have alwaysconcurrently been alternative jurisdictions where the level of freedom was greater. In ancient Rome, when Diocletian devalued the currency, raised taxes, increased warfare and set price controls, those people who actually created the economy on a daily basis found themselves in the same boat as Europeans and Americans are finding themselves in, in the 21st century.

    It may have seemed like the end of the world, but it was not. Enough producers left Rome and started over again in other locations. Those other locations eventually thrived as a result of the influx of productive people, while Rome atrophied.

    Turn a Blind Eye

    This is less dreary than the above approach, but it is nevertheless justas fruitless. It is, in fact, the most common of reactions – to just “hope for the best.”

    It’s tempting to imagine that maybe the government will realise that they’re the only ones benefitting from the destruction of freedom and prosperity and they’ll feel bad and reverse the process. But this clearly will not happen.

    It’s also tempting to imagine that maybe it won’t get a whole lot worse and that life, although not all that good at present, might remain tolerable. Again, this is wishful thinking and the odds of it playing out in a positive way are slim indeed.

    Accept the Truth, But Do Something About It

    This, of course, is the hard one. Begin by recognising the truth. If that truth is not palatable, study the situation carefully and, when a reasonably clear understanding has been reached, create an alternative.

    When governments enter the final decline stage, an alternative is not always easy to accept. It’s a bit like having a tooth pulled. You want to put it off, but the pain will only get worse if you delay. And so, you trundle off to the dentist unhappily, but, a few weeks after the extraction, you find yourself asking, “Why didn’t I do this sooner?”

    To be sure, those who investigate and analyze the present socio-economic-political deterioration do indeed espouse a great deal of gloom, but this should not be confused with doom.

    In actual fact, the whole point of shining a light into the gloom is to avoid having it end in doom.

    It should be said here that remaining in a country that is tumbling downhill socially, economically and politically is also not the end of the world. It is, however, true that the end result will not exactly be a happy one. If history repeats once again, it’s likely to be quite a miserable one.

    Those who undertake the study of the present deterioration must, admittedly, address some pretty depressing eventualities and it would be far easier to just curl up on the sofa with a six-pack and watch the game, but the fact remains: unless the coming problems are investigated and an alternative found, those who sit on the sofa will become the victims of their own lethargy.

    Sadly, we live in a period in history in which some of the nations that once held the greatest promise for the world are well on their way to becoming the most tyrannical. If by recognizing that fact, we can pursue better alternatives elsewhere on the globe, as people have done in previous eras; we may actually find that the field of daisies in the image above is still very much in existence, it’s just a bit further afield than it was in years gone by.

    And it is absolutely worthy of pursuit.

    *  *  *

    Clearly, there are many strange things afoot in the world. Distortions of markets, distortions of culture. It’s wise to wonder what’s going to happen, and to take advantage of growth while also being prepared for crisis. How will you protect yourself in the next crisis? See our PDF guide that will show you exactly how. Click here to download it now.

  • There Are "Absolutely" Middle Easterners Among Caravan: DHS Secretary Nielsen

    Homeland Security Secretary Kirstjen Nielsen doubled down on a claim that Middle Easterners are among those traveling in the Central American caravans currently making their way north in hopes of gaining asylum in the United States. 

    Speaking with Fox News Intelligence on Monday, Nielsen said: “We absolutely see people from the Middle East, from southeast Asia, from other parts of the world,” adding “They are not just from Central America.”

    “We don’t always know exactly who they are … What I can tell you is we stopped 3,000 people last year at the southwest border who had patterns of travel similar to a terrorist. We call those special interest aliens.“

    Nielsen also added that the migrants are using women and children as “barriers,” which are sent up to the front of the group to frustrate federal military and police, and that the rest of the caravans – which appear to be organized and financed – are comprised of “mostly single men.” She added that the timing and origin of the groups are suspicious in nature. 

    Nielsen’s comments come amid a CNBC report suggesting that President Trump’s decision to send thousands of US troops to reinforce border security in California, Arizona and Texas will cost upwards of $220 million. 

    Last week footage emerged of several groups of migrants becoming violent with Mexican authorities, including this clip of them throwing rocks at a helicopter. 

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    President Trump in response said that the US military would treat rocks as “rifles,” a comment he later walked back while still stressing that the caravan was a dangerous threat to the United States. 

    Meanwhile, according to Mexico News Daily, a fourth caravan of 4,000 asylum-seekers is now making its way north, bringing the total number of migrants headed towards the US above 12,000. 

    The first caravan started out with approximately 7,000 people, however around half either turned back or accepted asylum from Mexico. 

    Between 7,000 and 15,000 US troops will be stationed in Southern Border states, while the actual number of migrants which reach the US-Mexico border will undoubtedly be much smaller than the estimated 12,000 currently traveling north. An April caravan of approximately 1,200 people dwindled to several hundred people, who were granted asylum at the US border. 

  • No, Voting Doesn't Mean You "Support The System"

    Authored by Ryan McMaken via The Mises Institute,

    I admit it. I voted…

    In my home state of Colorado, all voting is by mailed paper ballots. That means, if you’re a registered voter, the county clerk sends you a ballot every election.

    And then — at least in my case — it sits there on a table near my desk.

    One is supposed to fill it out and then mail it back. Or drop it off in one of the mailbox-like boxes scattered around the city.

    Sometimes I do it.

    This time around, as the ballot sat there on the table, I kept thinking about the proposed tax increases I could vote “yes” or “no” on.

    Like many states in the Western half of the United States, this state makes frequent use of ballot initiatives and referenda in elections. Voters are asked to vote up or down any number of regulations and taxes which the policymakers will be more than happy to implement if they can muster a “yes” from the majority of voters.

    I’m certainly not willing to stand in line at a polling place, and I don’t care about getting an “I Voted!” sticker. But I had to admit the opportunity cost of sending in the ballot was really quite low. So, as I am not a big fan of new taxes, I filled out the ballot according to my whims, and sent it in.

    Does Voting Mean You Support the Regime?

    Nothing about this little anecdote would strike most people as remarkable in any way.

    Since at least the nineteenth century, though, there has been a debate over whether or not voting somehow means the voter has agreed to submit to – or even support – whatever the state does. In some cases, libertarians and anarchists who agree with the “voting = consent” claim conclude that voting is therefore immoral, or perhaps even a form of violence.

    Anarchist extraordinaire Lysander Spooner, however, disagreed:

    It cannot be said that, by voting, a man pledges himself to the Constitution, unless the act of voting be a perfectly voluntary one on his part. Yet the act of voting cannot properly be called a voluntary one on the part of any very large number of those who do vote. It is rather a measure of necessity imposed upon them by others, than one of their own choice.

    In other words, let’s imagine a small business owner were given the choice between Candidate A who promises to tax small businesses into oblivion, and Candidate B, who promises to lower taxes. It hardly follows that the small business owner who casts a ballot in this case was supporting the whole system and apparatus that had put him in such an unenviable position to begin with.

    Spooner continues:

    In truth, in the case of individuals, their actual voting is not to be taken as proof of consent, even for the time being. On the contrary, it is to be considered that, without his consent having even been asked, a man finds himself environed by a government that he cannot resist; a government that forces him to pay money, render service, and forego the exercise of many of his natural rights, under peril of weighty punishments. He sees, too, that other men practice this tyranny over him by the use of the ballot. He sees further, that, if he will but use the ballot himself, he has some chance of relieving himself from this tyranny of others, by subjecting them to his own. In short, he finds himself, without his consent, so situated that, if he use the ballot, he may become a master; if he does not use it, he must become a slave. And he has no other alternative than these two. In self-defence, he attempts the former.

    …it would not, therefore, be a legitimate inference that the government itself, that crushes [the voters], was one which they had voluntarily set up, or even consented to.

    In fact, when one adopts the position that voting indicates consent to the regime and all its acts, one is agreeing with the state’s apologists who repeatedly assert that, yes, voting means the voter acquiesces to the results of the election and the state overall.

    They don’t stop there, though. Herbert Spencer notes that, in the minds of the voting-as-consent ideologues, not voting counts as consent too. As does voting against the victorious side in any election. Thus, it is claimed:

    [T]he citizen is understood to have assented to everything his representative may do, when he voted for him.

    But suppose he did not vote for him; and on the contrary did all in his power to get elected some one holding opposite views – what then?

    The reply will probably be that, by taking part in such an election, he tacitly agreed to abide by the decision of the majority.

    And how if he did not vote at all?

    Why then he cannot justly complain of any tax, seeing that he made no protest against its imposition.

    So, curiously enough, it seems that he gave his consent in whatever way he acted – whether he said yes, whether he said no, or whether he remained neuter!

    A rather awkward doctrine this.

    Here stands an unfortunate citizen who is asked if he will pay money for a certain proffered advantage; and whether he employs the only means of expressing his refusal or does not employ it, we are told that he practically agrees; if only the number of others who agree is greater than the number of those who dissent.

    And thus we are introduced to the novel principle that A’s consent to a thing is not determined by what A says, but by what B may happen to say!

    The only alternative, we are told, is to move thousands of miles from friends, family, and property, learn a new culture (and probably a new language), and take up residence under a different regime..

    To define consent in this manner, though, sets the bar of consent so low as to render it utterly meaningless.

    “No” Doesn’t Mean “No” After All?

    The horrors of such a definition can be plainly seen if applied to the case of women and sexual consent. By the logic of the sort of “consent” Spencer describes, we are forced to conclude: if a women says “yes,” she consents. If she says “no,” she also consents. If she can’t run away, then she’s still consenting.

    One suspects that this would not be a terribly successful argument if employed by a rapist in a court of law.

    And yet, here we are, being told that no matter what you do at election time, nothing – short of self-imposed exile – is to be interpreted as actual opposition to the state.

    Expanding a “No” Vote for Candidates

    To be fair, voting for candidates would appear to be harder to defend in this vein than voting against specific policies.

    Voting “no” on a tax increase is fairly unambiguous, and can hardly by taken as support for any other policy. With candidates, however, there is far more room for state action. Even a candidate who might campaign on a tax cut will, after winning the election, take his election as a mandate to enact all sort of other objectionable laws that those who voted for him based on the tax issue would oppose.

    Thus, voting “yes” for any candidate is inherently more dangerous than simply voting “no” on a tax increase.

    For this reason, one might suggest that all ballots offer an “abstain” or “none of the above” option. Even if no further steps were taken — such as requiring a run-off in cases where “abstain” won the a majority — the option of voting against everyone could do wonders to illustrate the lack of legitimacy that political candidates truly have. This of course, is how we ought to interpret the vote of every eligible voter who prefers to not vote at all. Every non-vote is essentially a none-of-the-above vote, and many people choose to express their opposition to the candidates in this way.

    That’s a perfectly acceptable course of action. But it’s not the only acceptable one.

  • Sydney's Housing Crash Could End Up Being The Longest On Record 

    After a parabolic rise in Sydney home prices over the past cycle, mostly aided by a fear of missing out, property prices plateaued then rapidly moved lower midway through 2017, catching many by surprise.

    Sydney home prices have dropped 7.4% over the past year, according to CoreLogic’s latest Home Value Index, the sharpest annual percentage decline since February 1990.

    Cameron Kusher, a Research Analyst at CoreLogic, posted a series of charts on Twitter showing Australia’s largest and most expensive housing market has declined 8.2% from its cyclical peak 15 months ago, making this the fastest reversal in over three decades.

    As shown in the next chart by Kusher on Twitter, in the past, it has taken several years for Sydney home prices to revert to prior cyclical peaks whenever values have plummeted.

    Following the ugly downturn in the early 1990s, it took five years for home prices to return to their prior nominal peaks.

    Many of the country’s top economists forecasted home prices to increase in 2018; one forecaster even expected prices to jump 9%. However, this was not the case, as house prices have experienced their most significant and longest peak to trough decline in modern history – spurred by housing affordability constraints, tightening of lending standards, and the Australian Prudential Regulation Authority’s restrictions on new investor loans.

    The Australian Financial Review surveyed five top economists that now expect the national house value index would continue to deteriorate into 2019, with Sydney, the epicenter of the downturn.

    Stephen Koukoulas, of Market Economics, was the most downbeat of the bunch, with expectations prices would fall in Sydney between 7.5% and 10% in 2019 after a drop of 7.5% in 2018.

    Nationally, he predicted house prices would fall by between 5% and 7.5%

    “From the 3rd quarter in 2019, I am forecasting some stability in prices as supply and demand forces underpin new activity,” Koukoulas told The Australian Financial Review.”From the 3rd quarter in 2019, I am forecasting some stability in prices as supply and demand forces underpin new activity,” Koukoulas told The Australian Financial Review.

    Once a floor is found in prices, he then expects first-home buyers would enter the market and take advantage of increased levels of affordability.

    Five economist predictions for national house prices across 2019

    Most of the economists agreed that the downturn has mainly been driven by tighter lending standards, not an interest rate hike cycle seen in prior turning points, there is evidence this bear cycle could be the longest in history.

    The official policy rate of the Reserve Bank of Australia (RBA) has hovered at 1.50% since September 2016, which is at its lowest point on record, and some economists think the RBA could start hiking to get ahead of the next recession. An obvious negative for real estate markets.

    Also, recent tightening in mortgage lending standards has now mostly run its course, at least according to Australia’s banking regulator, it is unlikely that lending standards will be relaxed given Australia’s already-high household debt to income ratio, a tailwind for the real estate market that has now turned into a headwind.

    On top of everything mentioned above, an unprecedented supply of new housing is about to come online in Sydney, which will further tilt the supply side of the equation.

    It all points to a continuation of the Australian housing market crash, one that will surely go into the record books.

  • Once Again, Warren Buffett Has Given Us A Major Warning That Everything Is Expensive

    Authored by Simon Black via SovereignMan.com,

    Buffett’s holding company, Berkshire Hathaway, just announced a blockbuster quarter, earning nearly $7 billion.

    And Buffett’s still sitting on over $100 billion of cash. That means he’s got enough money to buy almost any company he wants, anywhere in the world.

    But the only move Buffett made in the last quarter was buying $928 million of Berkshire Hathaway stock.

    Some people might say this is a sign that Buffett thinks Berkshire’s stock is incredibly undervalued.

    To be fair, nobody knows Berkshire better than Buffett. And shares may present a good value at this level – an all-time high price.

    But it’s clear to me that Buffett simply can’t find anything else worth buying.

    Remember, Buffett’s got over $100 billion in cash (and he could use debt to fund an even larger acquisition).

    So he could buy stock in any publicly traded company. Or he could buy most any private company (the last time he did this was Precision Castparts in 2016 for $32 billion).

    He’s got so much cash he could even buy any one of the 451 out of 500 largest companies in the US – Nike, Starbucks, Goldman Sachs, etc.

    But, nope… He just bought back some Berkshire stock.

    In addition, he’s selling longtime holdings like drywall maker USG and IBM (for a $1 billion loss).

    I wrote about Buffett and his giant cash pile in February, just after Berkshire released its annual report.

    Back then, Buffett had a whopping $116 billion. But still couldn’t find anything to buy. As he said:

    In our search for new stand-alone businesses, the key qualities we seek are durable competitive strengths; able and high-grade management; good returns on the net tangible assets required to operate the business; opportunities for internal growth at attractive returns; and, finally, a sensible purchase price.

    That last requirement proved a barrier to virtually all deals we reviewed in 2017, as prices for decent, but far from spectacular, businesses hit an all-time high.

    As we wrote back then, it seems people are still willing to pay far too high a price for not that great of businesses.

    Buffett is famous for saying “be fearful when others are greedy and greedy when others are fearful.” And he’s sticking by that mantra today.

    Like Buffett, I’ve also been raising cash. In fact, I’m sitting on more cash today than at any other time in my life.

    And, like Buffett, I’m mostly holding that cash in 28-day T-bills.

    However, unlike Buffett, I don’t have $100 billion to spend.

    If I make a 20-50% return on a $5 million investment, that’s meaningful to me. But that’s peanuts to a guy like Buffett.

    He’s got to put billions of dollars to work to generate enough cash to make a difference. And that severely limits the areas he can hunt for value.

    But I’m able to look at all kinds of opportunities – like loans backed by fine wine, loans backed by bullion or European real estate and various, small-cap stocks around the world.

    Despite most markets trading at or near all-time highs, there’s still a ton of value if you’re willing to do some extra work and look outside the US.

    In The 4th Pillar, Tim Staermose just identified a consumer products company in South Korea trading for a 12% discount to its net cash backing.

    He’s also recommended a security that holds portfolio of blue-chip stocks (including companies like Starbucks) trading for over a 20% discount to their market value.

    And those are just two of the many opportunities you can take advantage of today in his 4th Pillar portfolio.

    Value investing has been left for dead as the dumb money has chased up the value of companies like Uber and Tesla.

    But when you can buy a profitable company for less than the amount of cash it has in the bank, it’s pretty hard to go wrong.

    I’ll bet Buffett would make those investments if he could.

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