Today’s News 8th January 2021

• France's 'Unwinnable War': Macron Seeks Exit Strategy From Mali After 8 Years Of Fighting
  France’s ‘Unwinnable War’: Macron Seeks Exit Strategy From Mali After 8 Years Of Fighting

  Authored by Dave DeCamp via AntiWar.com,

  Eight years into France’s campaign in Mali, Paris is looking for an exit strategy and is expected to announce a troop drawdown soon, according to a report from AFP.

  “[France] faces tough choices over how to keep pursuing Islamist extremists without becoming bogged down in a potentially unwinnable war.

  …Anxious to avoid becoming mired in a long Afghan-style conflict, Paris is preparing to announce a withdrawal of the 600 additional troops it deployed to the Sahel last year.”

  

  There are approximately 5,100 French troops stationed in Africa’s Sahel region. France is preparing to announce the withdrawal of 600 troops soon, and President Emmanuel Macron is considering bringing more home before the next presidential election in Spring 2022.

  The news comes at a time of heightened violence in the region. French airstrikes reportedly hit a wedding in central Mali on Sunday. Local sources said up to 20 wedding guests were killed.

  Over the past 10 days, five French soldiers have been killed in Mali, bringing the total number of French troops killed in the conflict to 50.

  France began its war against Islamist militants in the region in 2013.

  wait. didn’t france just bomb a wedding in mali yesterday? wasn’t france part of the 2004 u.s.-led coup in haiti? didn’t you all hail juan guaido as president of venezuela? didn’t y’all lead the bombing of lilbya and the murder of gaddafi? remember napoleon?

  too easy…. lol https://t.co/PA8425eSaU

  — Anacaona (@GrosMorne29) January 7, 2021

  https://platform.twitter.com/widgets.js

  French hawks argue a withdrawal from the Sahel is untenable since the al-Qaeda-linked militants are stronger than ever. Paris is also fighting the Islamic State in the Greater Sahara, a branch of ISIS that did not exist in the region before France’s intervention.

  Tyler Durden
  Fri, 01/08/2021 – 02:00

• Why One Conservative Is Proud Of Yesterday's Raid On Capitol Hill
  Why One Conservative Is Proud Of Yesterday’s Raid On Capitol Hill

  Authored by Brandon Smith via Alt-Market.us,

  There is a simple rule that one needs to understand when examining the plight of conservatives and liberty advocates in history, and it is this:

  Conservatives are not allowed to take action to stop the abuses against them. Whenever they do, they are summarily chastised as villains, or their accomplishments are twisted into something that is “shameful”. They are only meant to sit idle like punching bags waiting around for others to take out their frustrations on them.

  The protest at the Capitol Building this week was no exception, but before I get to that I need to address a propaganda meme which is making the rounds in the liberty movement right now: The notion that the whole event was “staged”.

  

  The assertion is that the raid on the Capitol was some kind of theater designed to “make conservatives look bad” as well as “give Congress an excuse to pull back from their opposition of the electoral vote count.”

  I have to say that this is a very clever propaganda ploy, as it accomplishes a couple of subtle but important manipulations.

  First, by claiming that the storming of the capitol was staged to make conservatives look bad, this impplies that the action is something to be ashamed of.

  Second, by claiming that the action was designed to disrupt the opposition process to the electoral vote count, the suggestion is that the electoral vote count matters.

  New Flash, folks! Congress wasn’t going to do jack about the electoral college. They were going to listen to themselves talk for several long hours and accomplish very little. This is what politicians do. It is terribly naive to expect them to do anything else. Concerns about ballot fraud are NEVER going to be addressed by an independent investigation and Congress has no intention of doing anything about this. The very idea that the protest somehow sabotaged the last chance to “stop the steal” is idiotic.

  By extension, there is no concrete evidence so far that the raid was staged. None. Police pulling back from the line because of an angry crowd is not evidence. Cops pulled back from angry crowds of BLM protesters all summer long; does that mean this was some kind of elaborate scheme to make BLM look bad? Or, did they just make themselves look bad?

  I understand that this assertion taps into the conspiracy brain of the average liberty movement person, but that is kind of the point, isn’t it?

  It is not surprising that this type of disinformation campaign is being planted into the greater discussion. As noted, the establishment DOES NOT want conservatives to take action independently, and they know that unlike far-left extremists we actually care about the image of our movement. So we are faced with a two pronged attack:

  The mainstream media and the political left accuses conservatives of “shameful” behavior bordering on “terrorism”. At the same time, rumors are spread within the liberty movement that the whole thing was a “false flag”, thereby reinforcing the dishonest claim that the protest was shameful and not something we should be engaged in.

  The entire thrust of this psyop is to convince us to never engage in protest action or direct action again, or we might “look bad”.

  Frankly, who cares at this point? No matter what we do we are going to be painted as the villains by the media, so the only thing left is direct action. There is only one way the corruption within our own government is going to be stopped, and it’s not through diplomacy or voting.

  The election does not matter. Trump does not matter. At least, not in the grand scheme of things. Whoever sits in the White House is irrelevant to the bigger problem at hand; and Trump staying in the White House does not change the fact that conservatives are going to have to unify and aggressively defend our freedoms to change our dysfunctional system and remove influencing globalists from power.

  Trump’s own cabinet is LOADED with banking elites, members of the Council on Foreign Relations as well as numerous globalists. Bottlenecking the conservative response and putting all our eggs in the Trump basket is foolish. The raid on the capitol, on the other hand, actually means something.

  It sends a message, first and foremost, that we are not going to sit idle anymore; that we are not going to tolerate further government overreach. Conservatives and even moderates are fed up. We have endured numerous trespasses by state governments during the lockdowns. We have lost our businesses and our jobs. For the past year we have witnessed the social justice cult burn down neighborhoods, hijack city streets and loot with impunity while leftists claim they are the “victims”, and now conservatives are being called terrorists because we protest. We have had enough, and the events in Washington are just the beginning of our response.

  Rather than being ashamed, we should be proud of what happened. Consider this for a moment – What did the protesters actually do that was so terrible? Stroll into the chambers of congress? How dare they! Some minor property damage? At least they didn’t burn the place down like Antifa would have done. Destroying Nancy Pelosi’s name plaque? That’s just funny.

  The media and the political left is acting like these people committed an atrocity against humanity, but they did NOTHING WRONG, and some were shot by law enforcement in the process.

  Now, juxtapose the media’s response to the conservative capitol protest getting aggressive to the media response when BLM and Antifa lunatics protested.

  Black Lives Matter spent the better part of the past year burning neighborhoods to the ground, destroying private businesses and attacking innocent people in the streets. BLM and Antifa attempted to take over large swaths of Seattle and Portland, declared the areas “autonomous zones”, then started randomly handing out firearms. The media calls it “peaceful protesting” and leftist politicians proclaim the actions righteous and just.

  Even now leftists are trying to argue that the BLM and Antifa protests were a model of peaceful action when compared to the events in the capitol.

  Does this look peaceful to you:

  So, endless violent action is peaceful action when leftists do it, but limited aggression by conservatives is the same as terrorism?

  Trump tweeted that conservatives should remain peaceful because we are the party of “law and order”. This is inaccurate and misleading. We do not blindly worship the law or law enforcement, we respect the law as long as it is rooted in our founding principles. What we value is our inherent freedoms and the Bill of Rights, and when these things come under threat it is perfectly justifiable to act, and if peaceful measures don’t work then non-peaceful measures are all that is left.

  We don’t have the luxury of caring about the mainstream narrative anymore. The propaganda is telling us to “stay in our lane”, shut up, sit down and watch America be dismantled piece by piece. My rule is, whatever the establishment clearly wants us to do, we should do the opposite. The narrative surrounding the events in the capitol makes it obvious that they do NOT want conservatives to leave their homes and take matters into our own hands. Doing the opposite is the only thing that makes sense.

  *  *  *

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  Tyler Durden
  Fri, 01/08/2021 – 00:05

• You Can Now Buy A Tiny Bulletproof Home For The Apocalypse 
  You Can Now Buy A Tiny Bulletproof Home For The Apocalypse 

  Whether it is the apocalypse or the US’s more immediate socio-economic collapse, sparked by the coronavirus pandemic, demand for doomsday bunkers has exploded. While only the ultra-wealthy can afford luxury doomsday condos buried hundreds of feet below the surface in old missile silos, millennials, who are mostly broke, have very little options to protect themselves from surging violence across major metros – until now. 

  Already popular among the millennial generation are tiny homes, no thanks to the Federal Reserve who has unleashed a massive housing bubble this year, sending affordability to decade lows. 

  This has allowed Argentina-based tiny homebuilder Grandio, to design and build prefab concrete tiny homes that cost around $75,000, and also these homes are bulletproof. 

  

  “We are only in the early stages of our sales and marketing activities, but the interest we are getting from prospective buyers and partners is outstanding with requests flowing in every day,” Jose Martin, an architect at Grandio, told Business Insider. 

  

  Martin said much of the inquiries for the tiny bulletproof home are coming from North America – comes at a time when the pandemic has unleashed a socio-economic bomb across major metros as hundreds of thousands of people living in cities rush to rural areas to escape the chaos. 

  In November, WSJ noted that tiny home sales are increasing as people look for refuge during the coronavirus pandemic. 

  Besides doomsday bunkers, it appears tiny bulletproof homes could be the next big trend as America, in less than one year, has transformed into a chaotic mess because of the virus pandemic. 

  Tyler Durden
  Thu, 01/07/2021 – 23:45

• How An Austrian And British Malthusian Brainwashed A Generation Of Americans
  How An Austrian And British Malthusian Brainwashed A Generation Of Americans

  Authored by Matthew Ehret via The Strategic Culture Foundation,

  The creation of false opposites has been a long-standing obstacle to human progress.

  

  From the ancient pleasure-seeking Epicureans who argued against the logic-heavy Stoics of ancient Rome to the war of “salvation through faith vs works” that schismed western Christianity, to the chaotic emotional energy driving the Jacobin mobs of France whose passions were only matched by the radical Cartesian logic of their Girondin enemies; humanity has long been manipulated by oligarchs who knew how to set the species to war against itself. Although these operations have taken many forms, the desired effect has always been the same: divide-to-conquer bloodbaths which drowned out the saner voices of Cicero (executed in 44 BCE), Thomas More (executed in 1535 CE), or Jean Sylvain Bailly (executed in 1793 CE).

  Today’s polarization across the Trans-Atlantic world has reached a fevered pitch with the “right wing conservatives” shouting for liberty and less government while left wing liberals call for more government and top-down reforms of the system (with Great Reset technocrats laughing in the background).

  Everyone with half a brain should be able to sense that the danger of civil war and economic meltdown hang over our destinies like a sword of Damocles, but instead of hearing calls for restoring the SCIENTIFICALLY PROVEN traditions of American System banking that author Ellen Brown recently documented in her powerful new essay, we find only feuding sects that assert we must EITHER have top-down centralized planning OR bottom-up free markets laissez faire policies devoid of any government intervention.

  To the degree that this false debate continues the overtones of France’s 1789-94 bloodbath will be heard growing louder with every passing day.

  Keynes vs Hayek: A False Dualism

  In this first of a three-part series, I will argue that the source of this confusion among Americans was first concocted in London during the height of the depression, centering on the figures of two London-based Malthusian hedonists. One was top-down economist John Maynard Keynes (1883-1946) and the other played the role of his supposed opponent in the form of “bottom up” advocate Friedrich von Hayek (1899-1992).

  

  To put it another way, these two fundamentally anti-republican ideologues whose lives were each devoted to the hereditary systems of empire constructed a widely publicized debate that asserted two opposing economic theories, either 1) government must spend arbitrarily to create jobs OR 2) government must cut budgets, end social safety nets and public services and let the strong survive leaving each unit of society to its own (supposedly) self-regulating passions.

  The constants among both apparent opponents (who remained friends throughout their lives) were that 1) neither believed that INTENTION or MIND should govern economic policy (Keynes believed in arbitrary “make work” which could not differentiate between the qualitative difference of a $100 paycheck to a digger of random holes vs $100 paycheck to an engineer building a dam), and 2) both believed equally in the universal validity of Malthus’s population theories, and of Bernard Mandeville’s satanic belief that personal vice creates public virtue. Both theories have underpinned British imperial grand strategy for over two centuries.

  

  It is also important to hold in mind that this 1932 debate emerged at a time that the world government agenda driven by the Bank of England and League of Nations were on the ascendency. This operation, in which both Keynes and von Hayek were thoroughly enmeshed, demanded fascist regimes control the world under a “scientifically managed” bankers’ dictatorship.

  One month after the London Times October 17, 1932 publication began to print arguments from proponents of both schools on how to best end the depression, Franklin Roosevelt was elected to the U.S. presidency.

  With his presidential victory, a specific form of economic planning was restored to the republic that had nothing to do with either school of Keynes or Hayek and everything to do with something uniquely embedded in the U.S. Constitutional traditions that petrified the hereditary empires of Europe’s old nobility.

  In the years leading up to his victory, FDR had worked closely with a grouping of bipartisan American congressmen and senators to revive a form of political economy which involved the paradoxical coexistence of increased government involvement together with massive increase in entrepreneurism, and private sector growth. The fact that FDR is attacked by communists for being a capitalist shill while being simultaneously attacked by capitalists for being a communist shill to this very day is a sign of this ongoing confusion and a testament to the effectiveness of British intelligence propaganda.

  The systemic inability for modern Americans to resolve the ‘FDR paradox’ today is due entirely to a sleight of hand pulled by the very same imperial power that has never forgiven the USA for declaring its independence in 1776.

  What Ben Franklin Created

  When Benjamin Franklin (1705-1790) had orchestrated his life-long project of establishing a new nation on this earth founded upon the principle of the sanctity of the individual (enunciated in the 1776 Declaration of Independence) and the sanctity of the General Welfare (as outlined in the Constitution’s 1787 pre-amble), he and his leading co-thinkers demonstrated a profoundly philosophical understanding of the political economy and also nature of true freedom which citizens must re-learn – quickly.

  In order to give practical meaning to the ideals of individual (bottom up) freedom and national (top down) collective well-being enshrined in America’s founding documents, a new system of political economy was created by Franklin and his closest followers among the founding fathers.

  This new system did not arise ex nihilo but was itself based upon the greatest traditions of French dirigisme of Jean-Baptiste Colbert (1619-1683), and earlier Cameralist schools of economic planning which grew out of the creation of the first modern nation states of France’s Louis XI and England’s Henry VII. For the first time in history (at least since the short-lived effort by Charlemagne in the 8th century), the idea of “money”, “value”, “profit” were tied not to the passive capital off which feudal landlords fed parasitically, or bounty to be looted, but rather the improvement of the lives of people from whom the legitimacy of government was recognized to originate.

  Throughout the 18th century, Benjamin Franklin became a leading American force for this school of thought which was outlined in his 1729 On the Necessity for a Paper Currency. In this influential essay, the young scientist argued for a system of finance, colonial scrip, and value governed by the growth of manufacturing and full spectrum economics. In his essay Franklin battled the British establishment who argued that the colonies should forever remain agrarian, backward and cash cropping, saying:

  “As Providence has so ordered it, that not only different Countries, but even different Parts of the same Country, have their peculiar most suitable Productions; and like wise that different Men have Genius’s adapted to Variety of different Arts and Manufactures, Therefore Commerce, or the Exchange of one Commodity or Manufacture for another, is highly convenient and beneficial to Mankind.”

  Some of Franklin’s leading protégé’s who carried this tradition into the 19th century included the first U.S. Treasury Secretary Alexander Hamilton (1755-1804), John Jay (1745-1829), Gouverneur Morris (1752-1816), Robert Morris (1734-1806), Isaac Roosevelt (1726-1794) (great-great grandfather to Franklin Roosevelt) and later Henry Clay (1777-1852), John Quincy Adams (1767-1848), Matthew Carey (1760-1839). Matthew Carey’s son Henry C. Carey (1793-1879) became a leading economic advisor to Abraham Lincoln.

  All of these figures defended the right of the young republic to develop “full spectrum economics” in order to gain true independence from the City of London.

  

  Henry C. Carey’s Seminal works that rallied the nation’s patriots to the cause of the American System included The Principles of Political Economy (1840), How to Outdo England Without Fighting Her (1865), Unity of Law (1872) and more. It was in The Harmony of Interests (1856) that Carey famously foretold of the emerging global fight between open vs closed systems that would define the post Civil War decades:

  “Two systems are before the world; the one looks to increasing the proportion of persons and of capital engaged in trade and transportation, and therefore to diminishing the proportion engaged in producing commodities with which to trade, with necessarily diminished return to the labor of all; while the other looks to increasing the proportion engaged in the work of production, and diminishing that engaged in trade and transportation, with increased return to all, giving to the laborer good wages, and to the owner of capital good profits… One looks to pauperism, ignorance, depopulation, and barbarism; the other in increasing wealth, comfort, intelligence, combination of action, and civilization. One looks towards universal war; the other towards universal peace. One is the English system; the other we may be proud to call the American system, for it is the only one ever devised the tendency of which was that of elevating while equalizing the condition of man throughout the world.”

  What did the “American System” Do?

  While the British System of laissez fair free trade demanded that governments do nothing, regulate nothing and plan nothing in order for the magical creative animal spirits of the self-regulating markets to “do their thing”, the American System took a very different approach.

  By applying protectionism, national banking, internal improvements and public credit, the American System was driven by the idea that “value” was located not in money or any material thing existent in the ephemeral “now” but rather in the development of the creative powers of mental activity of the people. Lincoln outlined this concept beautifully in his powerful “On Discoveries and Inventions” (1858) and this principle governed the creation of the Greenbacks when private bankers made every effort to cripple the Union’s access to credit needed to win the war.

  Using protection, all nations have the right and even duty to prevent the cheap dumping of foreign goods by imposing a tariff upon imports, thus ensuring that local production be favored. Dumping was an old practice of economic warfare which the British had honed since the 17th century crushing its colonies’ efforts to build up local manufacturing on countless occasions (and continues to be a key element of economic warfare masquerading behind the veneer of globalization in our current age).

  As demonstrated in the LPAC documentary 1932, whenever American System-followers in Russia, Germany, Italy, Japan, China, Spain and France applied protection, rail, and dirigiste credit, prosperity, independence and abundance flourished. Whenever these policies were abandoned, those nations were crippled and manipulated into wars by foreign interests.

  Between 1880-1930, this system was led by nationalist forces affiliated with President Garfield (1831-1881), President Ulysses Grant (1822-1885), Governor William Gilpin (1813-1894), President McKinley (1843-1901), Secretary of State James Blaine (1830-1893), and President Warren Harding (1865-1923). Each time it began to take hold the system was derailed by timely assassinations and it was only able to emerge once more in 1932.

  

  How Franklin Roosevelt Revived the American System

  With Roosevelt’s entry into office, the British Empire (using its Wall Street lackies) that had intentionally orchestrated the Great Depression in 1929 had realized that the American System was coming back to life for the first time in decades.

  While Warren Harding’s short-lived presidency saw a few noble attempts to resurrect the McKinley-Lincoln traditions of the republican party, his convenient “death by oyster poisoning” in 1923 ensured that the revival of the American System would not succeed. Over Harding’s dead body, free trade, bank deregulation, and speculation ran rampant throughout the “roaring twenties” led by Andrew Mellon, the Morgan dynasty and their puppet Calvin Coolidge. This decay turned the once-productive industrial economy of America into a casino of bubbles built on unpayable debts and over-extended broker call loans that went up in smoke in 1929.

  The “solution” that the financial oligarchy provided to the world in anticipation of the fear and starvation unleashed by the planned meltdown of the banking system was a novel economic miracle solution called “fascism”. This system soon swept the world from Italy, Germany, Austria and Spain. Within Britain, Canada and the USA, Wall Street/London sponsored fascist movements arose with lightning speed offering to solve all financial woes “and put food on the table” for millions of traumatized citizens. In a world of fear and instability, the masses were proving all too willing to ignore Ben Franklin’s sage advice by giving up their liberties to achieve a bit of security.

  It was within this context that Franklin Roosevelt’s call to kick the money changers out of the temple and declare war on the abuses of Wall Street was an unexpected breath of fresh air for millions of suffocating citizens. With FDR’s sabotage of the 1933 London Conference, the empire gasped as their carefully laid plans for world government run by local fascist enforcers were going up in smoke. Wall Street’s assassination plot in February 1933 and a military coup plot in 1934 failed, as the Pecora Commission shone the light of truth upon the abuses of those bankers that created the great depression.

  After putting dozens of leading bankers in prison, prosecutor Ferdinand Pecora described the operation years later: “Under the surface of the governmental regulation of the securities market, the same forces that produced the riotous speculative excesses of the ‘wild bull market’ of 1929 still give evidence of their existence and influence. Though repressed for the present, it cannot be doubted that, given a suitable opportunity, they would spring back to their pernicious activity.”

  In Washington, a bi-partisan network of patriotic statesmen representing the Lincoln-McKinley-Harding traditions rose to prominence and shaped in large measure the policies which came to be known as the New Deal together with associated bank reforms of the Glass-Steagall, national credit, protectionism, and large-scale megaprojects known as the “four corners” vision (Tennessee Valley authority/Rural Electrification, Hoover Dam, Grand Coulee dam/Colorado River development, and St Lawrence Seaway).

  Much like the Belt and Road Initiative today, these large-scale macro projects governed the tens of thousands of smaller state, county and municipal “micro” projects within a top-down dynamic.

  The Keynesian Myth

  Even though today’s popular narrative has asserted that FDR’s New Deal was a Keynesian innovation managed by the nebulous “Brain Trust”, the reality is that Keynes believed that FDR was a buffoon and FDR believed the Fabian eugenicist could only be considered a detached ivory tower mathematician but not a competent economist.

  In her autobiography, FDR’s Secretary of Labor Frances Perkins recorded the 1934 interaction between the two men when Roosevelt told her: “I saw your friend Keynes. He left a whole rigmarole of figures. He must be a mathematician rather than a political economist.” In response Keynes, who was then trying to coopt the intellectual narrative of the New Deal stated he had “supposed the President was more literate, economically speaking.”

  The ‘American System’ Caucus

  Those forgotten forces who have been nearly written out of history were American statesmen who had battled against the Federal Reserve Act in 1913, stood up to the police state apparatus begun by Teddy Roosevelt’s FBI in 1908, and against America’s turn towards imperialism with the death of McKinley. They were the men who risked much to stand up against the League of Nations World government schemes launched in 1919, and against the Wall Street/CFR takeover of U.S. foreign and internal policy.

  

  Senator George Norris showcasing the web of controls managed by the Wall Street oligarchs

  These names which should be celebrated today, interfaced closely with FDR and his allies Harry Hopkins and Henry Wallace. Some of their names include Senator Robert Lafollette Jr (R-Iowa) (1895-1953), Sen. Robert Wagner (D-NY) (1877-1953), Sen. Peter Norbeck (R-SD) (1870-1936), Sen. Edward Costigan (D-Colo.) (1874-1939), Senator George Norris (R-Neb) (1861-1944) and Rep. William Lemke (R-N.D.)(1878-1950). These were a few of the leading men that some historians have dubbed “the American System Caucus”, and while this article doesn’t leave room for their story, rest assured that more will be said about them in a future installment.

  While it would be a lie to say that there was no such thing as a “Brain Trust” or that Keynesian economists and Rhodes Scholars were not to be found among this group, the idea that this was the “cause” of the New Deal is a pure fiction.

  

  Taking Back Control of Credit Policy

  While surgery was begun on the cancerous financial system and unpayable debts depriving the nation of the credit needed to commence a reconstruction policy of the physical economy (over 50% of U.S. industrial potential was destroyed and unemployment hit 25%), Franklin Roosevelt’s long time ally Harry Hopkins worked with Harold Ickes to provide emergency work for over 3 million people in the first months under the Public Works Administration and Works Progress Administration.

  Although FDR could not destroy the private Federal Reserve that had taken control of U.S. monetary policy 30 years earlier, he was able to impose his own man (Marinner Eccles) onto it in 1934, forcing the beast to start obeying national law for the first time ever. Despite this maneuver, Wall Street oligarchs continued to sabotage FDR’s recovery by constricting credit, refusing to purchase treasury notes at strategic moments, or even speculating against the U.S. dollar itself. To get around these manipulations, the Reconstruction Finance Corporation (RFC) was brought online to function as a surrogate national bank channeling billions of dollars into small and medium businesses, industrial growth, and infrastructure projects.

  Psy Ops vs the New Deal: The Rise of the Austrian School

  Throughout the 1930s and 1940s, Mellon-Morgan-Rockefeller interests ran a multifaceted psychological war against the population. After their coup plans failed due to Gen. Butler’s brave whistleblowing in 1934, these groups created a think tank calling itself the “American Liberty League”. The irony of the word “Liberty” used by an organization whose controllers sponsored fascism before and even during WWII should not be lost on anyone.

  Through powerful oligarchs like William Randolph Hearst, Henry Luce, the Morgans, the Warburgs, the Duponts, and the Rockefellers, the Liberty League controlled the majority of mainstream media outlets, radio stations, and publishing houses in the USA, at the same time they co-ordinated with the newly re-organized FBI under J. Edgar Hoover. These groups worked hard to paint FDR as a Keynesian who only created inflationary “make work jobs” without any concrete intention for the future productive powers of labor. Through this sleight of hand, FDR’s enemies were able to invent a straw man that they could then refute by promoting the anti-Keynesian model known as the “Austrian School” that had formerly grown out of the British System inspired theories of Carl Menger (retainer for the Habsburg empire) and his aristocratic disciples Ludwig von Mises, Friedrick von Hayek, Frank Knight, and Sir John Claphan.

  By 1940, the American Liberty League formerly disbanded. However with FDR’s death its cabal of controllers spawned dozens of new think tanks that were enmeshed with the Council on Foreign Relations and Mont Pelerin Society mothership founded in 1947 by von Hayek and a group of eugenics-loving oligarchs whom we will encounter in a following report..

  Over the coming decades, the Liberty League morphed into hundreds of new think tanks which began with the American Enterprise Association (AEA) [later American Enterprise Institute] founded by Liberty League leader Raymond Moley and sponsored by General Mills, Chemical Bank and Bristol Meyers.

  Other think tanks built up by this network over the years included the Heritage Foundation, Cato Institute, Hudson Institute, Mises Institute, Manhattan Institute etc… which would set the groundwork for the later “conservative revolution” of the 1970s. This “Austrian School” revolution would spring to life once the 1945-1971 Keynesian perversion of Bretton Woods ended with the 1971 floating of the dollar off of the fixed exchange rate gold reserve system.

  Under this post-1971 era, a new god of the “markets” would replace the old god of “the state” and a new ethic of post-industrial consumerism would replace the former system of Keynesian controls that defined the post-WWII era. Those anti-Keynesian leaders of the American System tradition such as Henry Dexter White, Franklin Roosevelt, Wendell Wilkie, Sumner Welles, and Harry Hopkins were taken out of power through various means between 1945-1946 as the Anglo-American establishment regained control over U.S. foreign and internal policies. This Keynesian takeover destroyed the positive potential of the Bretton Woods Institutions which were designed originally to internationalize the New Deal via the creation of cheap credit for global development and win-win cooperation.

  In our next installments, we will look more deeply into the sordid minds and political operations controlling the figures of John Maynard Keynes and Friedrich von Hayek.

  Tyler Durden
  Thu, 01/07/2021 – 23:25

• Russia Unironically Chastises US As "Not Up To Modern Democratic Standards"
  Russia Unironically Chastises US As “Not Up To Modern Democratic Standards”

  Russia has joined the ranks of foreign governments expressing official “concern” for the stability of the US political system after Wednesday’s Capitol chaos.

  Russia’s Foreign Ministry spokeswoman Maria Zakharova told reporters Thursday that the whole episode and surreal images coming out of DC lays bare fault lines in American democracy, according to Russian media.

  

  Akin to Chinese state media, now busy having a field day over calling out Washington’s hypocrisy and ‘double standards’, Zakharova mocked the “archaic” American electoral system and underscored the fragility of the United States.

  “The electoral system in the US is archaic and does not meet modern democratic standards, creating opportunities for numerous violations, and American media has become an instrument of political struggle,” she said. Zakharova expressed Russia’s desire that “the friendly American people will experience this dramatic moment in their own history with dignity.”

  Putin has not personally weighed in, but senior Russian lawmaker Konstantin Kosachyov along with some others have made bold statements. Kosechyov, who is chair of the Russian upper house’s foreign affairs committee, posted a statement on Facebook saying:

  “The losing side has more than enough grounds to accuse the winner of falsifications – it is clear that American democracy is limping on both feet.”

  He added: “I say this without a shadow of gloating. America no longer charts a course and therefore has lost all rights to set it – and even more so to impose it on others.”

  

  Meanwhile, all the predictable hot takes on how this was somehow 3-dimensional chess master Putin’s game plan all along are rolling in….

  The political violence yesterday crushed Trump’s remaining support.

  Pelosi says this is exactly what Putin wanted after telling us for years that his goal was to increase Trump support. https://t.co/HPleFcFQ08

  — Max Abrahms (@MaxAbrahms) January 7, 2021

  https://platform.twitter.com/widgets.js

  Indeed for Pelosi all roads are perpetually leading to Putin, apparently.

  Tyler Durden
  Thu, 01/07/2021 – 23:05

• Prediction Consensus: What The 'Experts' See Coming In 2021
  Prediction Consensus: What The ‘Experts’ See Coming In 2021

  Authored by Nick Routley via VisualCapitalist.com,

  Making predictions is a tricky business at the best of times, but especially so after a year of upheaval. Even so, that didn’t stop people from trying their hand at reading the crystal ball. If anything, the uncertainty creates a stronger temptation for us to try to forecast the year ahead.

  Out of the thousands of public 2021 predictions and forecasts available, there are plenty of one-off guesses. However, things really get interesting when a desperate majority of experts begin to agree on what might happen. In some ways, these predictions from influential experts and firms have a way of becoming self-fulfilling prophesies, so it’s worth paying attention even if we’re skeptical about the assertions being made.

  This year, we more than doubled the number of sources analyzed for our 2021 Predictions Consensus graphic, including outlooks from financial institutions, thought leaders, media outlets, consultancies, and more.

  

  Let’s take a closer look at seven of the most popular predictions:

  ESG reaches a tipping point

  It seems like only recently that the term ESG gained mainstream traction in the investment community, but in a short amount of time, the trend has blossomed into a full-blown societal shift. In 2020, investors piled a record $27.7 billion of inflows into ETFs traded in U.S. markets, and that momentum only appears to be growing.

  

  Fidelity, among others, noted that climate funds are delivering superior returns, which makes ESG an even easier sell to investors. Nasdaq has tapped ESG to be “one of the hottest trends” over the coming year.

  China has a strong 2021

  Financial institutions that issue predictions generally hedge their language quite a bit, but on this topic they were direct. The world’s most populous country has already left the pandemic behind and is back to business as usual. Of the institutions that mentioned a specific number, the median estimate for GDP growth in China was 8.4%.

  

  A souring outlook on SPACs

  Much like any hot trend, once enough people get on the bandwagon the mood begins to sour. Many experts believe that special purpose acquisition companies (SPACs) are going to enter that phase in 2021.

  

  SPACs had a monster year in 2020, raising $82 billion in capital. That’s more funds in one year than in the last 10 years combined. Of course, now that these 200+ companies are flush with capital, they’ll need to find a target. Scott Galloway argues that SPACs “are going to vastly underperform over the next two to three years” since there aren’t enough good opportunities to satisfy that level of demand.

  Brands must be authentic and values-driven

  Over the past few years, brands have become increasingly values-driven. In their 2021 predictions, experts see this trend being pushed even further.

  Millennials, which are now the largest generation in the workforce, are shaping society in their own image, and the expectation is that companies have an authentic voice and that actions align with words. This trend is augmented by the transparency that the internet and social media have enabled.

  

  Being a “values-driven” company can mean many things, and often involves focusing on a number of initiatives simultaneously. At the forefront is racial inequality and diversity initiatives, which were a key focus in 2020. According to McKinsey, nine out of ten employees globally believe companies should engage in diversity and inclusion initiatives. When the chorus of voices grows loud enough, eventually actions must follow.

  A great rethinking of office life is underway

  The great work-from-home experiment will soon be approaching the one-year mark and a lot has changed in a short amount of time.

  Even firms that were incredibly resistant to remote work found themselves in a position of having to adapt to new circumstances thanks to COVID-19. Now that the feasibility of at-home work has been proven, it will be tough for companies to walk things back to pre-pandemic times. Over 2021, millions of companies will begin reengineering everything from physical offices to digital infrastructure, and this has broad implications on the economy and our culture.

  

  Individuals and employers start taking wellness seriously

  The past year was not good for our collective mental health. In response, many companies are looking at ways to support employees from a health and wellness standpoint. One example is the trend of giving teams access to meditation apps like Headspace and Calm.

  

  This focus on wellness will persist, even as people begin to return to the office. As commercial leases expire in 2021, companies will be re-evaluating their office needs, and many experts believe that wellness will factor into those decisions.

  Lastly, this trend ties into the broader theme of values-driven companies. If brands profess a desire to impact society in a positive way, employees expect actions to extend inward as well.

  Big Tech backlash continues

  Among experts, there’s little doubt that the Big Tech backlash will bleed over into 2021. There is a divergence of opinion on exactly what will happen as a result. There are three general themes:

  1. Regulators will admonish and threaten Big Tech publicly, but nothing concrete will happen.

  2. Facebook will be broken up into parts (Facebook, Instagram, and WhatsApp)

  3. Companies will proactively change their business practices and look for ways to settle quickly

  

  Aside from the thread of regulatory action, the tech sector is facing a bit of an identity crisis. Silicon Valley is grappling with the reality that the center of gravity is shifting. Pitchbook notes that Bay Area will fall below 20% of U.S. deal count for first time, and there have been very public departures from the valley in recent months.

  Faced with pressure from a number of different angles, the technology sector may have a year of soul-searching ahead.

  The Elephant in the Room

  COVID-19 is the one factor that impacts nearly every one of these 2021 predictions, yet, there were few predictions–and certainly no consensus from experts–on vaccine rollouts and case counts. It’s possible that the complexity of the pandemic and the enormous task of dealing with this public health crisis makes it too much of a moving target to predict in specific terms.

  In general though, expert opinions on when we’ll return to a more “normal” stage again range from the summer of 2021 to the start of 2022. With the exception of China, most major economies are still grappling with outbreaks and the resulting economic fallout.

  It remains to be seen whether COVID-19 will dominate 2022’s predictions, or whether we’ll be able to look beyond the pandemic era.

  The Good Stuff: Sources We Like

  Of the hundreds of sources we looked at, here were a few that stood out as memorable and comprehensive:

  Bloomberg’s Outlook 2021: This article compiled over 500 predictions from Wall Street banks and investment firms.

  Kara Swisher and Scott Galloway’s Big 2021 Predictions: Swisher and Galloway combine their deep understanding of the technology ecosystem with frank (and hilarious) commentary to come up with some of the most plausible predictions of 2021. From Robinhood to Twitter, they cover a lot of ground in this interview.

  Crystal Ball 2021: Fortune’s annual batch of predictions is always one to watch. It’s comprehensive, succinct, and hits upon a wide variety of topics.

  John Battelle’s Predictions 2021: John Battelle has been publishing annual predictions for nearly two decades, and this year’s batch is perhaps the most eagerly anticipated. His predictions are thoughtful, credible, and specific. It’s also worth noting that Battelle circles back and grades his predictions – a level of accountability that is to be praised.

  Like this feature? An expanded look at 2021’s predictions will be shared with our VC+ audience later this month.

  Tyler Durden
  Thu, 01/07/2021 – 22:45

• A Glimpse Of China's Mysterious Stealth Bomber Shown In Video
  A Glimpse Of China’s Mysterious Stealth Bomber Shown In Video

  The evolution of the pandemic and economic crash and President Trump’s’ push for deglobalization by slapping China with tariffs resulting in the fracturing of supply chains have heightened tensions between Washington and Beijing. 

  In response to soaring tensions, China has rapidly modernized its forces with stealth fighters and hypersonic weapons. 

  Late last year, China was expected to unveil the Xian H-20 supersonic stealth bomber, effectively doubling its country’s striking range. 

  However, that didn’t happen, but this week, the People’s Liberation Army (PLA) Air Force gave the first glimpse of the stealth bomber’s design in the service’s 2021 recruitment video released on Tuesday, according to Global Times.

  “In the closing minute of the video, an unknown aircraft rendered in computer-generated imagery enters the stage. It is covered in a white blanket and only the front outline can be seen, which suggests that the aircraft boasts a flying wing design with two intakes on the back of the plane. It has no visible tail wings and no winglets on the tips of the wings,” Global Times said. 

  Mysterious Stealth Bomber (clip from video) 

  

  The only view of the mysterious plane, likely the H-20, without a cover, is the aircraft’s view from a reflection on the googles of a pilot’s helmet.

  Mysterious Stealth Bomber In Reflection Of Pilot’s Googles (clip from video)

  

  Wei Dongxu, a Beijing-based military analyst, told the Global Times that the newly released video featuring an aircraft similar to US’ Northrop Grumman B-2 Spirit suggests the plane is likely the H-20.

  “This could mean that China has achieved a generation-leaping development in bomber planes and become in possession of a world-class strategic stealth bomber,” Dongxu said.

  With a range of 5,300 miles and internal weapon bays, which could carry hypersonic missiles, the H-20 would likely have striking capabilities to hit many US bases in the Pacific Ocean. 

  Courtesy of BofA is a map of US military bases and presence in the Pacific Ocean and, specifically, in proximity to China. 

  

  Now it’s only a matter of time before China releases the H-20 at some future airshow to show the world its next-generation bomber as Beijing could become the world’s top superpower by the end of the decade. 

  Tyler Durden
  Thu, 01/07/2021 – 22:25

• A Dollar Correction Could Spoil The Party
  A Dollar Correction Could Spoil The Party

  By Ye Xie, macro commentator at Bloomberg Markets Live

  There’s a growing risk of the dollar correcting higher. The nominal yield advantage of the U.S. has steadily increased relative to other G-10 currencies in recent months, accelerated by the expectations of further government spending now that the Democrats control Congress and White House.

  The yield difference between the U.S. and Germany has increased to the highest since the U.S. lockdowns in March. Even China’s yield advantage versus the U.S. is narrowing.

  

  Rate differentials haven’t been a prominent driver for exchange rates lately, but if more spending leads to U.S. economic outperformance, the dollar could move to the right side of the “smile curve,” where stronger growth means a higher dollar.

  To finance the twin U.S. deficits, foreign investors need to be compensated either by higher yields or a weaker dollar. The former reduces the need for the latter.

  A weaker dollar is part of the reflation trade that has benefited everything from equities to commodities. A corrective move in the dollar could spoil the party.

  Tyler Durden
  Thu, 01/07/2021 – 22:05

• Singapore Police Access COVID Tracing App Data For Criminal Investigations
  Singapore Police Access COVID Tracing App Data For Criminal Investigations

  In another instance where conspiracy theory becomes fact, a coronavirus tracing app in Singapore can now be used by the police to track citizens for criminal investigations, according to Channel News Asia. 

  In June, Singapore rolled out a mandatory COVID-19 tracing program that would identify people who had come in contact with virus carriers. The private data is managed by the government’s health department and stored on a server for 25 days. All data is encrypted to restrict access by third-parties.

  At the time, we said tracing apps would “usher in a massive surveillance state” where “no one is safe from the government.” 

  And indeed, that is the case in Singapore. About 80% of the country’s 5.6 million people have downloaded TraceTogether. The government told people that mass adoption of the app would allow the country to reduce social distancing restrictions. 

  

  However, as Channel News Asia points out, Singapore Police Force can now access TraceTogether location data for criminal investigations. 

  “The Government is the custodian of the TT (TraceTogether) data submitted by the individuals and stringent measures are put in place to safeguard this personal data,” Minister of State for Home Affairs Desmond Tan told Parliament on Monday. 

  A privacy statement on the app originally said the data collected would only be used “for contact tracing purposes.” Immediately after Tan’s comments to Parliament, the privacy statement was updated. 

  It now reads, “Authorized Police officers may invoke the Criminal Procedure Code (CPC) powers to request users to upload their TraceTogether data for criminal investigations.” 

  As countries rushed to develop tracing apps in 2020 under the guise of mitigating the spread of the virus, it appears the apps are nothing more than surveillance tools for the government to track their citizens, well, at least, in Singapore. 

  Tyler Durden
  Thu, 01/07/2021 – 21:45

• Turley: I Hate Federal Commissions, But Americans Need One To Look Into The 2020 Election
  Turley: I Hate Federal Commissions, But Americans Need One To Look Into The 2020 Election

  Authored by Jonathan Turley,

  Below is my column in USA Today on the need for a federal commission on the 2020 election. While I opposed the challenge and the call for the ten-day commission, I do believe that a real commission is warranted.  Indeed, the violence yesterday only further shows the deep divisions in this country over these lingering questions. However, there must be the commitment to a real commission – not another placebo commission…

  

  Here is the column:

  I hate federal commissions. I have always hated federal commissions. Federal commissions are Washington’s way of managing scandals. They work like placebos for political fevers, convincing voters that answers and change are on the way.

  That is why it is so difficult for me to utter these words: We need a federal election commission. Not the one proposed by some Senate Republicans. And not like past placebo commissions. An honest-to-God, no-holds-barred federal commission to look into the 2020 presidential election.

  With the challenge to the certification of election votes, some Republican members of Congress are calling to delay the proceedings for 10 days and impanel a commission to “audit” the results. There is precedent for such a commission. Just not good precedent. Indeed, citing the Electoral Commission of 1877 as a model of good constitutional process is like citing the Titanic as a model of good maritime navigation. The commission was an utter disaster.

  The 1876 election commission

  The commission was formed after the contested 1876 presidential election of Democrat Samuel Tilden and Rutherford Hayes. Tilden won the popular vote and was just one vote short of the electoral votes needed to win the White House. The election was marred by open fraud, including South Carolina certifying a vote of 101% of the eligible voters.

  As a compromise, the commission was formed and consisted of 15 members: five Supreme Court justices and five members from each chamber of Congress. The key was that it was supposed to be composed of seven Democrats, seven Republicans and one independent. However, in a move that seemed calculated to secure his vote for Tilden, the Illinois legislature then moved to appoint the independent, Justice David Davis, to the Senate. If they wanted to buy his vote, it was a colossal failure when Davis decided to take the seat and leave the commission. He was replaced by a Republican, and the commission voted along strictly partisan lines to install Hayes, not Tilden.

  In many ways, the Electoral Commission was a model for most federal commissions, which are designed for good politics and not good government.

  An example is the 9/11 Commission, which was stacked with reliable allies to guarantee that no one — and no party — would be blamed for the negligence leading to up to the attacks.

  The commission spent two years and millions of dollars. It went to almost a dozen countries, interviewed more than 1,000 people and archived over 2.5 million pages of documents. The result was a report that blamed no one specifically and since concluded that Presidents Bill Clinton and George W. Bush were “not well served,” in the words of the commission’s chairman, by the FBI and CIA.

  You see, if everyone is responsible, no one is responsible. Despite showing that the attacks could have been prevented under existing laws and powers, the budgets and powers of both agencies were then massively increased.

  That is not what we need. There are three reasons why the need for a real commission is needed:

  ►First, and most important, this was an unprecedented election in the reliance of mail-in voting and the use of new voting systems and procedures. We need to review how that worked down to the smallest precincts and hamlets.

  ►Second, possibly tens of millions of voters believe that this election was rigged and stolen. I am not one of them. However, the integrity of our elections depends on the faith of the electorate.

  Roughly 40% of that electorate have lingering doubts about whether their votes actually matter. Most of the cases challenging the election were not decided on the merits. Indeed, it seems they haven’t even been allowed for discovery. Instead, they were largely dismissed on jurisdictional or standing groups or under the “laches” doctrine that they were brought too late. Those allegations need to be conclusively proven or disproven in the interests of the country.

  ►Third, there were problems. There was not proof of systemic fraud or irregularities, but there were problems of uncounted votes, loss of key custodial information and key differences in the rules governing voting and tabulations.

  We have spent billions to achieve greater security and reliability after prior election controversies. Indeed, we had a prior election commission that failed to achieve those fundamental goals.

  The importance of having a commission

  A real commission will take a couple years to fully address these allegations. It will be meaningless if it’s stacked by the same reliable political cutouts used historically in federal commissions. It should be formed on a commitment of absolute transparency with public hearings and public archiving of underlying material before the issuance of any final report. That way, the public at large can analyze and contribute to the review of this evidence.

  There is one other task for Congress. It should rescind and replace the Electoral Count Act passed after the Hayes-Tilden election. It is one of the worst conceived and crafted federal laws on the books. The constitutionality of that act has long been challenged, including some who argue that Congress has nothing but a purely ceremonial role in opening state certifications and counting them. 

  Courts are likely to recognize that Congress has a more substantive role, particularly when rivaling sets of electors are presented or there is clear evidence of fraud. However, the validity of such electoral votes should be left largely to the courts in challenges in the given states. That is why the current challenge is unwarranted. There is no serious basis to challenge the validity of the electoral votes certified by the states.

  The main challenge, however, remains the same: Whether Congress can appoint a real federal commission without rigging the result by appointing partisan members. In 1877, to quote from a speech of Ohio Sen. Allen Granberry Thurman, “It was perfectly clear that any bill that gave the least advantage, ay, the weight of the dust in the balance, to either party, could not become the law of the land.”

  Nothing has changed. The stakes are too high to allow even a dust particle to tip the difference on the ultimate findings. The dust-free option requires a dependent, not independent, commission. Otherwise, the public will be the loser.

  So, let’s have a commission, but let’s make it a real one.

  Tyler Durden
  Thu, 01/07/2021 – 21:25

• Second Cabinet Member Quits: Betsy De Vos Resigns As Trump Education Secretary
  Second Cabinet Member Quits: Betsy De Vos Resigns As Trump Education Secretary

  One by one, Trump’s cabinet members are starting to fall like flies, and just a few short hours after Elaine Chao, Trump’s Transportation Secretary, became the first cabinet member to resign citing the “entirely avoidable” storming of the Capitol building by pro-Trump supporters, late on Thursday, Education Secretary Betsy DeVos became the second cabinet member to resign, the WSJ reported.

  “We should be highlighting and celebrating your Administration’s many accomplishments on behalf of the American people,” Mrs. DeVos wrote in a letter to the president.

  

  “Instead we are left to clean up the mess caused by violent protesters overrunning the U.S. Capitol in an attempt to undermine the people’s business. That behavior was unconscionable for our country. There is no mistaking the impact your rhetoric had on the situation, and it is the inflection point for me.”

  She added: “Impressionable children are watching all this, and they are learning from us.”

  Her full resignation letter is below:

  

  While a number of Democrats have called for invoking the 25th Amendment, and one Republican joined Thursday, there did not yet appear to be serious talk among administration officials for the move.

  Tyler Durden
  Thu, 01/07/2021 – 21:21

• December Payrolls Preview: Brace For A Very Ugly Number
  December Payrolls Preview: Brace For A Very Ugly Number

  In its preview of tomorrow’s December payrolls report, Newsquawk reminds us that while further fiscal support for Americans has now been rubber-stamped by lawmakers, it was done so after the payroll survey period and will therefore not be reflected in the employment situation report. Which is why nobody should expect any upside surprises in tomorrow’s report, and if anything, it may well be the Trump admin’s “kitchen sink” as “finely-tuned government data” is finally allowed to catch up to reality, potentially resulting in a catastrophically bad number.

  To be sure, labor market metrics have generally erred on the weaker side in the month: initial jobless claims jumped in the BLS reference week, and PUA assistance also rose, though continuing claims data fell. ADP’s gauge of private payrolls disappointed to the downside on the back of weakness in services employment, auguring poorly for the official BLS data (it is worth noting that the ADP has tended to report weaker numbers than the BLS of late).

  Manufacturing and services sectors are also diverging at the employment level: ISM reported a rise in manufacturing employment in the month, but a fall into contractionary territory for services jobs. Meanwhile, Challenger reported that US employers’ planned job cuts also rose in the month.

  In its unusually downbeat forecast, Goldman estimates a -50,000 print, after +245k in November and +610k in October, and also 150,000 below consensus As Goldman writes, the broad-based resurgence of the coronavirus and related business restrictions are consistent with a further deceleration in job growth, and most of the Big Data employment signals we track indicate an outright decline in December. Additionally, while continuing jobless claims declined during the payroll month, much of the drop reflected the expiration of program eligibility (as opposed to reemployment). Taken together, layoffs in leisure and hospitality and other virus-sensitive services categories temporarily halted the employment recovery that began in May, and as a result private payrolls tumbled by 100k in December according to Goldman; the worst month since the covid crisis first broke out.

  That’s the bad news. The good news is that President-elect Biden has pledged further fiscal support for Americans after Democrats managed to secure control of Congress, and this might limit downside for markets if Friday’s data disappoints. Conversely, as Newsquawk accurately points out, Fed talk about tapering asset purchases has picked-up recently, and this may only get louder in the event of a big beat (which however won’t happen).

  Here is what Wall Street expects:

  • Nonfarm Payrolls exp. +100k (range: -400k to +530k, prev. +245k);
  • Unemployment Rate exp. 6.7% (range: 6.5-7.2%, prev. 6.7%);
  • U6 Unemployment (prev. 12.0%);
  • Participation Rate (prev. 61.5%);
  • Private Payrolls exp. +100k (prev. +344k);
  • Manufacturing Payrolls exp. +20k (prev. +27k);
  • Government Payrolls (prev. -99k);
  • Average Earnings M/M exp. +0.2% (prev. +0.3%);
  • Average Earnings Y/Y exp. +4.4% (prev. +4.4%);
  • Average Workweek Hours exp. 34.8hrs (prev. 34.8hrs).

  Some more observations from Newsquawk:

  ADP: The December data from payroll processor ADP disappointed expectations, printing -123k against an expected +88k; it was the first decline since April. The report noted that as the impact of the pandemic on the labor market intensified, job losses were concentrated in retail and leisure and hospitality. Analysts at Pantheon Macroeconomics observed that the Homebase employment data for small firms always hinted that the ADP consensus might have been on the optimistic side, though the numbers were ultimately a bit stronger than the Homebase numbers for October and November. “That gap has now closed,” Pantheon writes, “the underlying story here is the impact on the services sector from the patchwork of anti-COVID measures imposed across the country in Q4, alongside people choosing to reduce their social interactions in the face of soaring infections.” The consultancy also points out that ADP’s data has been weaker than the official BLS numbers in every month since April, though the size of the errors has diminished. “Still, we see good reasons to think that Friday’s official payroll number will be better than ADP, and above zero,” it said, reminding us that ADP’s model includes lagged official payroll numbers as well as information from firms using ADP’s services, and accordingly, the cooling of the NFP data in November will have weighed on the December ADP; “that doesn’t rule out further downward pressure on the official data in December after COVID restrictions tightened further, but we still think it likely that Friday’s private sector jobs number will be about +150K,” it adds.

  JOBLESS CLAIMS: Initial jobless claims data that coincides with the BLS employment report survey period saw weekly claims rise to 892k from 862k, and the four-week moving average to 814k from 778k the previous week. However, continuing claims data fell in the survey week to 5.32mln from 5.51mln. Wells Fargo said the rise was a bad omen for the December jobs report; the bank said that renewed restrictions and individual efforts to stem the spread of COVID were bearing down on the labour market. It was the second straight weekly rise, during a week where claims usually drop; however, the non-seasonally adjusted Pandemic Unemployment Assistance rose by 40K. Since then, however, the situation appears to have brightened, after lawmakers struck a deal on stimulus ¬– but still too late to be reflected in the December payrolls data, however.

  MANUFACTURING SURVEYS: The manufacturing ISM report for December saw the employment sub-index rise back into expansionary territory (above 50.0), printing 51.5 from 48.4. ISM said that only three industries (Fabricated Metal Products, Computer & Electronic Products, Chemical Products) of the six big sectors expanded. That said, it noted that continued strong new-order levels and an expanding backlog indicate potential employment strength for the first quarter of 2021, and panellist comments indicated that significantly more companies are hiring or attempting to hire than those reducing labour forces. (NOTE: ISM says that an employment index above 50.8 percent, over time, is generally consistent with an increase in the Bureau of Labor Statistics data on manufacturing employment).

  SERVICES SURVEYS: The employment sub-index within the December services ISM disappointed to the downside, printing 48.2 and entering contractionary territory (from the prior 51.5) following a run of three months in expansion. The outcome was not entirely unexpected, given the ADP’s payrolls report hinted at weakness in the services sector (the ADP reported that services sector payrolls declined by 105k in the month), with the resurgence of the pandemic towards the end of the year weighing. The services sector job losses primarily stemmed from the arts, entertainment, rental, mining, accommodation, food services sectors; four industries, however, reported employment growth (management of Companies and support services, wholesale trade, utilities, finance/insurance). The ISM report noted that respondents said “less staff needed in restaurants due to restrictions” and “we had to reduce our workforce even further.” Analysts note, however, that this sub-index too has tended to understante the BLS data recently.

  JOB CUTS: Challenger reported that US-based companies were planning 77,030 job cuts in December, rising from the 64,797 mark in November, and significantly above the 32,843 reported in December 2020. The consultancy said that the jump in Q4 saw the fewest job cuts of the year (222,493, down from the 497,215 in Q3), though that is a lot higher than the 127,687 reported in Q4 2020. Challenger said that in the final months of the year, companies that may have survived the initial impact of the pandemic in March and April determined staffing adjustments based on increasingly difficult market conditions: “while some segments were up, such as warehousing, shipping, financial, and some manufacturing segments, many others were hurt considerably, chief among them Hospitality, Entertainment, and Leisure.” According to the Bureau of Economic Analysis, disposable personal income decreased by $218 billion in November and consumer spending decreased 0.4%, and Challenger said that “as the economy continues to shed jobs with hundreds of thousands of initial jobless claims each week, consumer spending will continue to drop. Retail and leisure activities will suffer further, especially before widespread vaccinations give Americans confidence to spend money, and companies the ability to create more jobs.”

  ARGUING FOR A WEAKER-THAN-EXPECTED REPORT:

  • The third wave of Covid. The public health situation deteriorated further in December, with the pace of new coronavirus infections and hospitalizations both elevated and rising. As shown in Exhibit 1, by the December survey week, restaurant seatings on Opentable had fallen back to July levels—a time when leisure and hospitality payrolls were 0.85mn lower than in November. Business restrictions and lower demand for these and other services categories also will weigh heavily on tomorrow’s report, more than offsetting gains in less-sensitive categories.

  

  • Big Data. High-frequency data on the labor market is generally consistent with a decline in payrolls in December, with a median decline of 160k across seven measures. Of those that Goldman tracks, only the Google Mobility measure is consistent with an above- consensus report (and admittedly, it has been one of the more accurate measures during the crisis).

  

  • ADP. Private sector employment in the ADP report fell by 123k in December, below consensus expectations and consistent with a decline in the official measure. The report text highlighted weakness in the leisure and hospitality sector, consistent with virus effects.
  • Job availability. The Conference Board labor differential—the difference between the percent of respondents saying jobs are plentiful and those saying jobs are hard to get — fell into contractionary territory (to -0.2 in December from +6.9 in November and +7.1 in October).
  • Job cuts. Announced layoffs reported by Challenger, Gray & Christmas rose by 49% in December after falling by 6% in November. They remain 143% above their December 2019 levels.

  ARGUING FOR A STRONGER THAN-EXPECTED REPORT:

  • Education seasonality. A rise in education employment (public and private) is expected, as virtual schooling reduces the scope for seasonal downtime for support staff. Some of the janitors and support staff who normally stop working in December had already left the workforce due to school closures. Reflecting this, education payrolls are expected to decline by less than the BLS seasonal factors anticipate, resulting in a 50-100k reported rise across private, state, and local education categories.

  NEUTRAL/MIXED FACTORS:

  • Employer surveys. Business activity surveys declined on net in December, and the employment components of survey trackers declined but are still in narrowly-expansionary territory (non-manufacturing -1.0pt to 50.1; manufacturing -0.1pt to 54.2).
  • Census hiring. The 2020 Census has already wound down, with only 6k temporary workers left on payroll during the November report. Accordingly, only a modest decline in this category is expected in tomorrow’s report (around -3k).

  Tyler Durden
  Thu, 01/07/2021 – 21:12

• Peter Schiff: Congress Is The Real Threat, Not Protests
  Peter Schiff: Congress Is The Real Threat, Not Protests

  Via SchiffGold.com,

  Somewhat lost in the chaos of the DC protests was the fact that Democrats won both Georgia Senate runoff races. That effectively gives the Democrats control of both houses of Congress. In his podcast, Peter Schiff made the case that Congress is the real threat to America, not the protesters who broke into the Capitol building.

  

  Peter said he thinks that Trump’s threat to veto the spending bill unless Congress upped the stimulus checks to $2,000 was a key reason the Democrats won.

  That put Senate Republicans in an untenable position where they were the only thing standing between voters and a $2,000 check.”

  Rep. Nancy Pelosi immediately seized on the opportunity that Trump handed her and called for a vote in the House on the bigger stimulus. But Sen. Mitch McConnell blocked the move.

  That opened up a great window of opportunity for president-elect Joe Biden because he was basically able to frame the Georgia election as a referendum on those checks. Biden actually bribed the electorate, the voters, by basically saying, ‘Hey, if you want your $2,000 check, you need to vote Democrat. If you vote Republican and the Senate stays in Republican hands, you’re not going to get your $2,000 because those greedy Republicans won’t sign on to the legislation.’”

  So Georgians voted Democrat. And they’re almost certainly going to get $2,000

  But what is that $2,000 going to buy? Probably not very much.”

  The bottom line is now the Democrats are going to be able to get a lot of things done that they wouldn’t have been able to do had the Senate stayed in Republican hands. You can almost certainly count on tax increases on corporations and “the rich,” and more regulations. As Peter put it, “Democrats will keep their promises when it comes to making government bigger and more expensive.”

  None of this is good for the market. In fact, after the presidential election, the markets rallied on the belief that the Republicans would hold the Senate and serve as a firewall against an all-out Democratic Party agenda. And yet the stock market rallied again after it became clear that the Democrats would take the Senate. The Dow was up 437 points and set a record. The S&P 500 set another record. And the Russell 2000 was up by nearly 4%. This despite protesters storming into the US Capitol building.

  Why was the market up? This is clearly bad news. The only thing that a Congress controlled by the Democrats means is corporate earnings will almost certainly be lower with higher taxes and more regulations, and the economy will be weaker than it would have been had the Republicans been in a position to hinder the Biden agenda.

  But as Peter put it, “Who gives a damn?” The only thing that matters to this market is that there will be more spending and bigger deficits. And that means the Federal Reserve will have to print more money to finance the deficits.

  That is the reason the stock market is up. It is money printing. It is inflation that is driving the stock market.”

  Meanwhile, Treasuries got clobbered. The yield on the 10-year rose back above 1%. That sounds low and it is in absolute terms. But compared to yields as low as 40 basis points earlier this year, 1% is a pretty big gain.

  So, even though we’re low in relative terms, we’re much higher than we used to be. And what’s more important is the trend. We could see an explosive move up in interest rates. Now, the only reason we may not see an explosive move up in interest rates is because the Federal Reserve doesn’t let it happen. Because the Federal Reserve interferes in the bond market by printing even more money to buy even more bonds to prevent rates from rising.”

  Inflation is driving this market. And the irony is that the Fed will have to create more inflation in order to prevent inflation from pushing interest rates up.

  They’re literally fighting fire with fire. Bond prices are falling because investors are worried about inflation. And so the Fed creates more inflation to prevent bond prices from falling and now investors have even more to worry about. This is the Catch-22. This is the situation that’s going to unravel.”

  So, why isn’t gold getting a big boost? It’s an inflation hedge.

  Gold did have a strong rally on the first trading day of the year. But it was down in the aftermath of the Georgia Senate runoff. Peter said he thinks that is primarily a function of risk-on sentiment. Investors are focused on the surging stock market, not worrying about safe-haven. Rising interest rates may have also put some drag on the gold market. People often equate rising interest rates as bad for gold, especially if you think the Fed is about to hike short-term rates.

  Traders are overlooking the fact that the Fed is not going to raise rates. It doesn’t matter what’s happening to inflation. The Fed’s not going to fight it. It doesn’t matter what’s going on with long-term rates. The Fed is not going to raise short-term rates. The other factor that the markets are overlooking is that even though long-term rates are rising, these are nominal rates. The inflation rate is rising faster than interest rates. So, even though nominal rates are rising, real rates are falling. That is bullish for gold.”

  In this podcast, Peter also talked about some of the economic data that came out, and he offers some thoughts on bitcoin and the DC protests.

  Tyler Durden
  Thu, 01/07/2021 – 20:50

• Capitol Police Chief Resigns Amid Torrent Of Criticism, Reports Of Officer's Death
  Capitol Police Chief Resigns Amid Torrent Of Criticism, Reports Of Officer’s Death

  After releasing a statement earlier Thursday afternoon condemning the riotous behavior and revealing that the officer who shot and killed Ashli Babbitt, Steven Sund, the chief of the Capitol Police, has just resigned.

  Sund’s resignation will go into effect on Jan. 16, meaning he will be gone before any potential unrest tied to Joe Biden’s inauguration on Jan. 20. A police spokeswoman said Thursday that the department’s union called for a “change at the top.”

  

  According to NBC News, officers are “frustrated and demoralized” with how a lack of leadership undermined the response to the mob, said Gus Papathanasiou, the union chairman. Papathanasiou laid the blame on a failure of planning by Sund and the rest of the Brass, while praising officers on the ground for their work.

  “We prioritized lives over property, leading people to safety,” Papathanasiou said in his statement. “Not one Member of Congress or their staff was injured. Our officers did their jobs. Our leadership did not. Our Law Enforcement partners that assisted us were remarkable.”

  The statement didn’t quite call for Sund’s resignation.

  In his statement earlier, Sund commended officers earlier Thursday, calling their actions “heroic” and slammed the chaos that erupted as “criminal riotous behavior.”

  Earlier, in an interview with NBC’s “Today” show, former US Capitol Police Chief Terrance Gainer slammed his successor’s handling of the incident as a “failure” and added that it “raises a lot of questions.”

  Finally, CNN reports that a Capitol Police Officer – presumably one of the 14 who was injured in yesterday’s violence – has died.

  A US Capitol Police officer has died from events stemming from Wednesday’s riot at the Capitol, three sources confirmed to CNN.

  The police officer is now the fifth person to die as a result of the day’s violence. One woman was shot and killed by Capitol Police as the crowd breached the building and three others suffered medical emergencies that proved fatal.

  Rioters on Wednesday breached the Capitol building and the Senate chamber, ransacked the offices of Pelosi and other Capitol offices, and a laptop was stolen from the office of Oregon Sen. Jeff Merkley.

  Authorities have already arrested nearly 70 people in connection with Wednesday’s chaotic ransacking of the Capitol building, and presumably anyone responsible for the officer’s wounds and/or the killing of the officer who died Thursday will be high on prosecutors’ list for arrest and prosecution. Aside from Babbitt, three others died of medical emergencies during yesterday’s unrest.

   

  Tyler Durden
  Thu, 01/07/2021 – 20:30

• Kamala Harris Called Riots "A Movement" Last Summer, Said "They Should Not" Stop
  Kamala Harris Called Riots “A Movement” Last Summer, Said “They Should Not” Stop

  Authored by Matt Margolis via PJMedia.com,

  Violence is never the answer to resolving conflict, but it’s hard not to see the hypocrisy of the left when they act surprised or condemn what happened at the U.S. Capitol on Wednesday.

  

  In June 2020, in the aftermath of the nationwide rioting following the death of George Floyd at the hands of a Minneapolis police officer, Kamala Harris even gleefully predicted that the rioting wouldn’t end, telling Stephen Colbert, host of “The Late Show,” that they shouldn’t end.

  “They’re not going to stop. They’re not going to stop,” she told him.

  “This is a movement, I’m telling you. They’re not gonna stop. And everyone beware because they’re not gonna stop. They’re not gonna stop before Election Day and they’re not going to stop after Election Day. And everyone should take note of that. They’re not gonna let up and they should not.”

  The protests Kamala Harris spoke of were responsible for an estimated $1 – $2 billion in property damage between May 26 and June 8, 2020, and dozens of deaths, including that of retired Minneapolis police officer, David Dorn.

  What would happen if Trump said of the protestors who stormed the U.S. Capitol Wednesday, “They’re not going to stop. They’re not going to stop. This is a movement, I’m telling you. They’re not gonna stop. And everyone beware because they’re not gonna stop. They’re not gonna let up and they should not.”

  But Trump never said anything like that. In fact, Trump urged his supporters to go home.

  “I know your pain, I know your hurt. We had an election that was stolen from us. It was a landslide election, and everyone knows it, especially the other side. But you have to go home now. We have to have peace. We have to have law and order. We have to respect our great people in law and order. We don’t want anybody hurt.”

  Joe Biden and Kamala Harris didn’t condemn the BLM riots that plagued cities nationwide like Portland, Minnesota, Seattle, Atlanta, Chicago, and Kenosha until polling suggested that they needed to.

  Tyler Durden
  Thu, 01/07/2021 – 20:10

• "We'll See You In Court": Sen. Josh Hawley Blasts 'Orwellian' Simon & Schuster Over Canceled Book
  “We’ll See You In Court”: Sen. Josh Hawley Blasts ‘Orwellian’ Simon & Schuster Over Canceled Book

  Senator Josh Hawley (R-MO) responded Thursday afternoon to an announcement by publisher Simon & Schuster that it would no longer publish his planned book, after the GOP lawmaker led objections to Congress’s certification of President-elect Joe Biden’s victory.

  

  “After witnessing the disturbing, deadly insurrection that took place on Wednesday in Washington, D.C., Simon & Schuster has decided to cancel publication of Senator Josh Hawley’s forthcoming book,” the publisher said in a statement, adding “We did not come to this decision lightly.”

  “As a publisher it will always be our mission to amplify a variety of voices and viewpoints: at the same time we take seriously our larger public responsibility as citizens, and cannot support Senator Hawley after his role in what became a dangerous threat to our democracy and freedom.“

  Hawley responded in a Thursday statement via Twitter, saying “This could not be more Orwellian. Simon & Schuster is canceling my contract because I was representing my constituents, leading a debate on the Senate floor on voter integrity, which they have now decided to redefine as sedition.”

  “Let me be clear, this is not just a contract dispute. It’s a direct assault on the First Amendment. Only approved speech can now be published. This is the Left looking to cancel everyone they don’t approve of. I will fight this cancel culture with everything I have. We’ll see you in court.”

  My statement on the woke mob at @simonschuster pic.twitter.com/pDxtZvz5J0

  — Josh Hawley (@HawleyMO) January 7, 2021

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  Tyler Durden
  Thu, 01/07/2021 – 19:50

• Trump Tweets For The First Time Since Suspension, Says "New Administration Will Be Inaugurated On Jan 20"
  Trump Tweets For The First Time Since Suspension, Says “New Administration Will Be Inaugurated On Jan 20”

  Almost exactly 12 hours after his Twitter account was suspended for 12 hours (with the caveat that a permanent suspension would follow if he did not follow twitter’s terms of service), Trump returned to his favorite social network and in a 2:41 min video condemned Wednesday’s Capitol riots while effectively conceding, saying that he would focus on ensuring a smooth transition to the Biden administration and that “a new administration will be inaugurated on Jan 20.”

  Trump began by saying he was “outraged by the violence, lawlessness and mayhem” in the “heinous attack on the Capitol.” Saying that “the demonstrations who infiltrated the Capitol have defiled the seat of American democracy” he slammed “those who engaged in the acts of violence and destruction” saying they “do not represent our country. And to those who broke the law, you will pay.”

  Proceeding next to the outcome of the election, Trump said that “we have just been through an intense election and emotions are high. But now tempers must be cooled and calm restored. We must get on with the business of America.”

  “My campaign vigorously pursued every legal avenue to contest the election result. My only goal was to ensure the integrity of the vote. In so doing I was fighting to defend American democracy”, a statement which  we doubt Congress Democrats will agree with. Trump then went on to say that “we must reform our election laws to verify the identity and eligibility of all voters and ensure faith and confidence in all future elections.”

  Which brings us to Trump’s technical concession: “Congress has certified the results. A new administration will be inaugurated on Jan 20. My focus now turn to ensuring the smooth, orderly and seamless transition of power. This moment now calls for healing and reconciliation.”

  Trump then turned his attention to the covid pandemic, saying that “defeating this pandemic and rebuilding the greatest economy on earth will require all of us working together. It will require a new emphasis on the civic values of patriotism, faith, charity, community and family. We must revitalize the sacred bonds of  love and loyalty that bind us together as one national family.”

  The president concluded with yet another implicit concession, but left off in a somewhat cryptic fashion: “To the citizens of our country, serving as your president has been the honor of a lifetime. And to all of my wonderful supporters, I know you are disappointed but I also want you to know that our incredible journey is only just beginning.”

  And now we wait to see if and when Twitter will nuke this video too.

  pic.twitter.com/csX07ZVWGe

  — Donald J. Trump (@realDonaldTrump) January 8, 2021

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  Tyler Durden
  Thu, 01/07/2021 – 19:32

• Chicago Schools Chief: Half Of Teachers Pressured By Teachers’ Union Didn’t Show Up For Work
  Chicago Schools Chief: Half Of Teachers Pressured By Teachers’ Union Didn’t Show Up For Work

  By Epoch Times,

  Nearly half of the teachers in the Chicago Public Schools (CPS) district didn’t show up when they were ordered to return for in-person instructions after the winter break, a district official said. Janice Jackson, the CEO of the public school district serving some 340,000 students, said in a Tuesday press conference that a little more than 60 percent of all school-based staff have returned to classrooms as expected. That accounts for about half of teachers and three-quarters of assistant and support staff.

  

  Jackson said the number of employees who didn’t return was “significant, considering the fact that they were pressured” by the Chicago Teachers Union (CTU), which has been urging teachers and staff to stay out of classrooms since the early days of the CCP virus pandemic.

  CPS has informed those who were expected to return but didn’t that their absence was not excused, Jackson said, noting that the district has an “absent without leave policy,” through which “individuals who are refusing to report to work and who will be considered absent without leave will face progressive discipline.”

  “We have sent notices to staff who did not return to ensure that our expectations are clear, and we are optimistic that more staff will report to work in the coming days,” she said. “If staff choose not to attend and support the students who are relying on them, we will handle those on a school-by-school and case-by-case basis.”

  Jackson noted that the all-remote learning is failing many students across the city, especially those from black and Latino families.

  “We cannot sit back and allow a generation to just falter because of made up reasons around why we can’t do reopening,” she said. “A year from now, there’s going to be a reckoning around what happened to those students that have been sitting at home, not being properly served because many of them have families who have to be essential workers.”

  The CTU on Wednesday criticized CPS’s plan of sending public school teachers back for in-person instructions for the first time during the pandemic, arguing that doing so puts teachers’ health in danger.

  “We are here this morning to underscore for the public how absolutely callously CPS has treated educators who have requested accommodations or leave,” CTU Deputy General Counsel Thad Goodchild said during a press conference, reported Chicago Sun Times.

  Goodchild said that CPS is forcing employees to report to work, even though they have family members with health conditions.

  “This is effectively telling employees that they must either go without a paycheck, move out of their homes or risk the lives of their medically fragile relative,” he said.

  Tyler Durden
  Thu, 01/07/2021 – 19:30

• A Bizarre Discrepancy Is Blowing Up The Trade "Data" Between US And China
  A Bizarre Discrepancy Is Blowing Up The Trade “Data” Between US And China

  Earlier today, the Census Bureau announced that in December, the US trade deficit jumped to a whopping $68.1 billion, an increase of $5 billion in one month and just inches of the all time biggest trade deficit recorded in the depths of the global financial crisis.

  

  Yet while troubling, and a clear testament that the US is losing the trade war with China or whoever, this wasn’t the big news. The really big news is that when one focuses on just the trade between the US and China, the bilateral balance has been trending in the wrong direction, helped as one would expect by the effects of COVID-19 (yes, this is yet another way that China has benefited from unleashing the covid pandemic on the world). As Stephen Gallo noted, China’s merchandise exports to the US, as a share of total exports, ended 2019 at 13.6%, but they were back to 17.6% as of November 2020.

  In short, after the US made some headway in its trade war with Beijing, all that progress and more is now gone as Chinese net exports are steamrolling ahead… thanks to covid!

  Yet as we first pointed out last month, while the trade surplus with the US according to China Customs data indeed hit a record high, US Bureau of Economic Analysis data shows something quite different, and this discrepancy is shown the chart below:

  

  This is, to say the least, strange: after all data is data, and when one using the same nominal amount of trade exports and imports between the two countries engaging in trade, one should – in theory at least – end up with the same trade surplus (and respectively deficit) number.

  Alas, as the chart above shows, not only has that has not been the case for the past two decades, but curiously, after years of US data showing a larger bilateral deficit with China than the Chinese data shows a surplus with the United States (largely due to the so-called Hong Kong port effect which explains much of the discrepancy), this has reversed in the past few months when China’s reported exports to the United States have significantly exceeded reported U.S. imports (the exact opposite of the established pattern). This can be seen clearly in the chart below which is a zoomed in portion the bilateral trade balances shown above:

  

  This phenomenon which has escalated drastically in recent months, was first pointed out by former Treasury official Brad Setser who pointed out the data discrepancy in an October blog post , writing that “there is no doubt there is a gap. In July 2018, China said it exported $41.6 billion to the United States, and the United States reported importing $47 billion from China. In July 2019, China said it exported $38.9 billion to the United States (down because of the tariffs), and the United States reported importing $41.4 billion from China. And in July 2020, China said it exported $43.7 billion to the United States, while the United States only reported importing $40.7 billion from China.”

  As a result, as Setser adds, “the answer to a lot of politically-salient questions—for example, is the bilateral trade deficit with China larger or smaller now than in 2016?—hinges on whether you use the U.S. or the Chinese data. “

  If you look at the Chinese data, its current monthly surplus with the United States is at an all-time high for the months of July and August, topping its pre-trade war peaks by substantial margins

  In the U.S. data, the July deficit with China and Hong Kong (adding in Hong Kong reduces the size of the deficit as the United States runs a surplus with HK) is only just above its 2016 levels.

  Fast-forwarding two months to the latest December data only shows that this divergence has accelerated with the latest Chinese data showing yet another record surplus for the month of November.

  To be sure, and as one can easily see in the charts above, the gap between China’s reported exports to the United States – red line – and reported U.S. imports – blue line – plus the larger deficit when reported from the U.S. side than the surplus on the Chinese side, has been a long-standing pattern. It reflects the previously discussed role of Hong Kong in U.S.-China trade, because as Setser explains, “a lot of what China records in its data as an export to Hong Kong historically has ended up in the U.S. data as an import from China, and a lot of what the United States reports as an export to Hong Kong has historically ended up in the Chinese data as an import from the United States.”

  What is novel here is the change in the pattern – the long established and well-understood discrepancy between the import and export side data has gone away.    

  The puzzle, as Setser wrote, “is why the sign on the discrepancy looks to be flipping.” There are two possible explanations which immediately come to mind.

  Chinese exporters might be overstating their exports, in general and to the United States. Overstating exports is a classic way of getting capital into a country with capital controls.

  However, a simpler explanation is that the US tariffs have created a strong incentive for firms importing into the United States to go to some lengths to understate their imports from China. Thus, U.S. imports from China are now likely under-counted (which by implication holds the bilateral trade deficit down).

  As Setser concludes, while “mapping one country’s import data to a partner’s export data” is a dull but exercise, “sometimes it yields interesting results. A similar exercise back in 2015—the Chinese current account surplus stopped tracking the goods balance—led me to look at whether the reported increase in tourism imports in the Chinese data was matched by a rise in the number of actual tourists (it wasn’t) and ultimately produced quite a good Fed paper.” We are confident that economists looking at the growing discrepancy in trade data between the US and China will soon be busy coming up with their own theories, even if the real answer why this most critical trade relationship in a world where the US-China trade war has been the overriding theme for much of the past 4 years, will likely remain a mystery.

  Tyler Durden
  Thu, 01/07/2021 – 19:15

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