- Goldman Believes Johnson Can Still Pull Off Last-Minute Brexit Deal
Goldman Believes Johnson Can Still Pull Off Last-Minute Brexit Deal
Analysts at Goldman have been assiduously tracking ‘Brexit’ odds, and with the uproar over Prime Minister Boris Johnson’s alternative Brexit plan this week, the bank’s Brexit team has published a new note laying out the various alternatives for how the Brexit drama might play out over the coming weeks.
In terms of the final outcome, the bank’s odds haven’t changed much: Goldman’s team of analysts still believe that the most likely outcome (60%) is for the UK and EU to agree on a deal before Oct. 31. Next up? Another delay – the ‘no Brexit at all’ option – to which the analysts assigned odds of 25%.
The least likely outcome (15%), despite all of the handwringing and hysteria in Parliament, is a ‘no deal’ Brexit on Oct. 31, as most expect the Commons will find some way to force Johnson to comply with a law requiring him to request a delay if a Brexit deal isn’t reached by mid-October.
Their biggest cause for optimism is their belief that Johnson’s deal, contentious as it may be, will serve as the basis for a final deal with the EU27.
According to PM Johnson’s latest Brexit proposals, Northern Ireland (NI) and Great Britain (GB) would both leave the EU’s customs union, but NI would remain aligned with EU regulations on all goods and agri-foods. This plan would necessitate customs checks on North-South trade and regulatory checks on East-West trade, with the former taking place away from the frontier and the latter subject to re-approval by the Northern Ireland Assembly every four years. In most other respects, PM Johnson’s Brexit proposals resemble the Withdrawal Agreement negotiated between the UK and the EU under former Prime Minister Theresa May.
The customs checks proposed between Northern Ireland and Ireland are contentious because they repudiate the joint commitment made in December 2017 to avoid “a hard border, including any physical infrastructure or related checks and controls” on the island of Ireland.
The mechanism for approval by the NI Assembly is contentious because, at least on current proposals, the DUP would have an effective veto over Northern Ireland’s position in the EU’s single market. Any such veto would be unacceptable to Ireland, not least because it risks hardening the North-South regulatory border in the future.
Johnson’s plan, as the analysts observe, strikes a compromise between two proposals: “The Northern Ireland-Only Backstop” (which was rejected by the Commons) and the “Brady Amendment”, which was rejected by the EU27.
Because of this, they believe both sides have room for compromise.
We think there is political space for further compromise. PM Johnson was careful to present last week’s proposals as an opening offer rather than an ultimatum. First, the NI consent mechanism could be re-configured to remove any single party’s potential veto power. Second, the implementation period preceding any new customs arrangements could be extended, well beyond the end of 2020. Third, if a backstop were to be reinserted into current proposals, that backstop could be covered by a time limit together with the principle of consent, in order to allay concerns that NI might be permanently excluded from the customs territory inhabited by the rest of the UK.
In our view, a mutually acceptable compromise could include NI (not UK) membership of the “facilitated customs arrangement” proposed in the Political Declaration advocated by PM May, with the default position beneath Stormont’s consent mechanism implying ongoing NI membership of EU (not UK) regulatory rules. Taking a longer view, it is important to note that the current UK government seems intent on: (i) leaving the EU “whole and entire”, (ii) pursuing an independent trade policy, and (iii) respecting the peace process in Northern Ireland. These three objectives imply that – sooner or later – the UK and the EU must negotiate a practical solution to allow two customs territories to co-exist on the island of Ireland. That solution is likely to rely on the reconciliation of two different interpretations of the Good Friday Agreement.
And Johnson’s ability to shift the DUP’s position ever-so-slightly from opposing to accepting regulatory checks suggests that the PM would be able to sell a backstop-compromise deal to Parliament if it truly comes down to ‘this deal or no Brexit at all’.
PM Johnson has managed to shift the DUP from a position in which they oppose any checks of any kind between GB and NI, to a position in which they accept regulatory checks but oppose customs checks on East-West trade. If the DUP agree to the EU’s counter-offer, we think the majority of the Eurosceptics in the Conservative Party will follow suit. If the existing Political Declaration is also enhanced to include commitments to uphold workers’ rights and maintain existing environmental standards, we think a clutch of Labour MPs from “Leave” constituencies will also be incentivised to vote in favour of a Brexit deal.
Of course, any keen observer of the Brexit process would have some thoughts on the possibility of a snap election. Goldman believes Parliament ultimately won’t brook the risk that an election returns a Johnson-led majority in favor of a no-deal exit. Polls suggest this is a real possibility (even if the perception from all of the media coverage might suggest that the conservatives would be in for a serious electoral beatdown).
For Johnson, the key to securing a deal, according to Goldman, is fanning the perception that no-deal is a real possibility. Thanks to the Benn Act (the law that was passed by last month by a ‘rebel alliance’ of MPs), Johnson will be legally compelled to request an extension if there’s no deal by Oct. 19. Goldman’s analysts are skeptical that Johnson will be able to find a legal loophole…but this must continue to seem like a real possibility for Europe.
But if Johnson has any trouble winning support for whatever compromise agreement is hammered out with the EU, a legal challenge to the Benn Act could help Johnson give Parliament the impression that its only choices are ‘Johnson’s deal’ or ‘no deal’. Which might be enough to convince any remaining Tory holdouts.
Tyler Durden
Tue, 10/08/2019 – 02:45 - "World Take Note!" – Genocide Of Christians In Nigeria Escalates
“World Take Note!” – Genocide Of Christians In Nigeria Escalates
Authored by Raymond Ibrahim via The Gatestone Institute,
Muhammadu Buhari, the Muslim president of Nigeria – who reached that position in part thanks to former US President Barack H. Obama – continues to fuel the “genocide” of Christians in his nation, according to Nigerian Christian leaders.
Most recently, Father Valentine Obinna, a priest of the Aba diocese of Nigeria, attributed the ongoing slaughter of Christians to the planned “Islamization of Nigeria”:
“People read the handwriting on the wall. It’s obvious. It’s underground. It’s trying to make the whole country a Muslim country. But they are trying to do that in a context with a strong presence of Christians, and that’s why it becomes very difficult for him [Buhari].”
Nigeria is roughly half Muslim, half Christian. A 2011 ABC News report offers context on when and why Muslim anger reached a boiling point:
The current wave of [Muslim] riots was triggered by the Independent National Election Commission’s (INEC) announcement on Monday [April 18, 2011] that the incumbent President, Dr. Goodluck Jonathan [a Christian], won in the initial round of ballot counts. That there were riots in the largely Muslim inhabited northern states where the defeat of the Muslim candidate Muhammadu Buhari was intolerable, was unsurprising. Northerners [Muslims] felt they were entitled to the presidency for the declared winner, President Jonathan, [who] assumed leadership after the Muslim president, Umaru Yar’Adua died in office last year and radical groups in the north [Boko Haram] had seen his [Jonathan’s] ascent as a temporary matter to be corrected at this year’s election. Now they are angry despite experts and observers concurring that this is the fairest and most independent election in recent Nigerian history.
Between 2011 and 2015, Boko Haram – a jihadi group that committed ISIS-types of atrocities even before ISIS came into being — terrorized and slaughtered thousands of Christians, particularly those living in the Muslim-majority north. In 2015, Nigeria’s Muslims finally got what they wanted: a Muslim president in the person of Muhammadu Buhari. The violence, however, only got worse. Muslim Fulani herdsmen – the ethnic tribe from which Buhari hails – joined and even surpassed Boko Haram in their slaughter of Christians.
Between June 2017 and June 2018 alone, Muslim Fulani slaughtered approximately 9,000 Christians and destroyed at least a thousand churches. (It took three times longer for the Fulani to kill a fraction [1,484] of Christians under Jonathan’s presidency.) In just the first six months of this year, 52 lethal terror attacks targeting Christian villages occurred.
“Nearly every single day, I wake up with text messages from partners in Nigeria, such as this morning: ‘Herdsmen stab 49-year-old farmer to death in Ogan,'” human rights lawyer Ann Buwalda said in July.
Whenever the mainstream media touches on the violence wracking Nigeria, it repeats what Obama’s Assistant Secretary of State for African Affairs, Johnnie Carson, claimed after a church was bombed, leaving nearly 40 Christian worshippers dead on Easter Sunday, 2012.
“I want to take this opportunity,” Carson said, “to stress one key point and that is that religion is not driving extremist violence” in Nigeria.
As Sister Monica Chikwe recently explained, however:
“It’s tough to tell Nigerian Christians this isn’t a religious conflict since what they see are Fulani fighters clad entirely in black, chanting ‘Allahu Akbar!’ and screaming ‘Death to Christians.'”
Similarly, the Christian Association of Nigeria asked:
“How can it be a [secular or economic] clash when one group [Muslims] is persistently attacking, killing, maiming, destroying, and the other group [Christians] is persistently being killed, maimed and their places of worship destroyed?”
In short, Christians are being targeted by Boko Haram and Fulani herdsmen because, to quote Fr. Valentine Obinna, President Buhari and his Muslim cabinet “want to make sure the whole country becomes a Muslim country,”
As the following quotes make clear, Fr. Obinna is not alone in accusing President Buhari of clandestinely fueling his Fulani clansmen’s jihad against Christians:
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“[T]he Muslim president [Buhari] has only awarded the murderers with impunity rather than justice and has staffed his government with Islamic officials, while doing essentially nothing to give the nation’s Christians, who make up half the population, due representation….. Hundreds of indigenous Numan Christians in Adamawa state were attacked and killed by jihadist Fulani herdsmen. When they tried to defend themselves the Buhari govt. sent in the Airforce to bomb hundreds of them and protect the Fulani aggressors. Is this fair? WORLD TAKE NOTE!” — former Minister of Aviation, Femi Fani-Kayode, 2017 (caps in original; see here too).
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“Under President Buhari, the murderous Fulani herdsmen enjoyed unprecedented protection and favoritism… Rather than arrest and prosecute the Fulani herdsmen, security forces usually manned by Muslims from the North offer them protection as they unleash terror with impunity on the Nigerian people.” — Rev. Musa Asake, the General Secretary of the Christian Association of Nigeria, 2018.
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Buhari “is himself from the jihadists’ Fulani tribe, so what can you expect?” — Emmanuel Ogebe, Washington DC-based human rights lawyer, in conversation with Gatestone, 2018.
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“They want to strike Christians, and the government does nothing to stop them, because President Buhari is also of the Fulani ethnic group.” — Bishop Matthew Ishaya Audu of Lafia, 2018.
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Buhari “is openly pursuing an anti-Christian agenda that has resulted in countless murders of Christians all over the nation and destruction of vulnerable Christian communities.” — Bosun Emmanuel, the secretary of the National Christian Elders Forum, 2018.
While acknowledging President Buhari’s role, the National Christian Elders Forum has been more direct concerning the ultimate source of violence in Nigeria:
“JIHAD has been launched in Nigeria by the Islamists of northern Nigeria led by the Fulani ethnic group. This Jihad is based on the Doctrine of Hate taught in Mosques and Islamic Madrasas in northern Nigeria as well as the supremacist ideology of the Fulani. Using both conventional (violent) Jihad, and stealth (civilization) Jihad, the Islamists of northern Nigeria seem determined to turn Nigeria into an Islamic Sultanate and replace Liberal Democracy with Sharia as the National Ideology. … We want a Nigeria, where citizens are treated equally before the law at all levels….”
Although Christians were only recently the majority of Nigeria’s population, the ongoing genocide against them has caused their population to drop – to the point that Christianity in Nigeria is, according to the National Christian Elders Forum, “on the brink of extinction,” thanks to “the ascendancy of Sharia ideology in Nigeria [which] rings the death toll for the Nigerian Church.”
Such is the current state of affairs: a jihad of genocidal proportions has been declared on the Christian population of Nigeria — and according to Nigerian Christian leaders, spearheaded by that nation’s president and his fellow Fulani tribesmen — even as Western media and analysts present Nigeria’s problems as products of economics — or “inequality” and “poverty,” to quote former US President Bill Clinton on the supposedly true source that is “fueling all this stuff.”
Tyler Durden
Tue, 10/08/2019 – 02:00 -
- Democracy Is Now A Hindrance To The Imperial State
Democracy Is Now A Hindrance To The Imperial State
Authored by Charles Hugh Smith via OfTwoMinds blog,
Democracy is the coat of paint applied for PR purposes to the Imperial State.
If we step back from the histrionics of impeachment and indeed, the past four years of political circus, we have to wonder if America’s democracy is little more than an elaborate simulation, a counterfeit democracy that matches our counterfeit capitalism (Matt Stoller’s term).
If we review the mechanics of our “democracy,” we find that swapping which party controls Congress doesn’t really change the policies of The Imperial State, the central state that oversees America’s global commercial and geopolitical empire.
Next, consider the high return rate of incumbents. Once in power, politicos can skim the millions of dollars in campaign contributions needed to win re-election.
Then there’s the some are more equal than others nature of the judicial system that serves the interests of financial and political elites: Bernie Madoff was free to continue his Ponzi scheme for years despite whistleblower attempts to instigate a federal investigation, and pedophile /schmoozer / “intelligence agency asset” Jeffrey Epstein was free to exploit underage teens and pile up $200 million after a wrist-slap conviction.
The corporate mass media is the PR machine for the Imperial State. If the state seeks to sell the public a war of choice, the media dutifully pounds the drums of war. If the Imperial State decides to disempower a president or other elected official, the media will hound the elected official until he/she is disgraced or buried, too busy fighting off the ceaseless media propaganda to function. The mass media excels at ruthlessly mocking political targets, reducing their stature in the public eye and undermining their “soft power.”
As for presidents: as long as the prez follows the Imperial minders’ orders, everything will be fine. Cross the minders and you’re out. The perfect presidential candidate from the perspective of the Eastern Establishment / National Security State was Bush I: Eastern Establishment blue-blood, Yale, combat military service, and stints in high offices, including high-level diplomacy and the CIA.
Bush I famously lacked “the vision thing,” but presidents only need “the vision thing” during the campaign–witness Obama’s “hope and change” slogan. Once elected, they just need to follow the Imperial script, which includes a permanent PR campaign touting “democracy” as a necessary facade for the actual workings of the Imperial State.
Bush I was the ideal Imperial State president because he understood the need for the velvet glove of diplomacy, the most important element of which is an orchestrated demonstration of Imperial restraint. This also includes healthy dollops of PR about the sanctity of our alliances, which are heavily promoted as the acme of win-win cooperation, etc. He also understood the essential role of America’s commercial Empire: the US dollar, US banking and US corporate interests around the world.
Imperial State handlers cannot tolerate loose-cannon presidents, those who keep their own council and who act outside the “recommended guidelines,” for example, trying to make peace with rivals and enemies that the Imperial State cultivates as “enemies” for its own purposes.
John F. Kennedy appeared to be the ideal Imperial State president: wealthy Eastern Establishment, Harvard, combat military service, informal diplomatic experience via his father’s connections, an enthusiastic supporter of the Imperial State’s Cold War and a youthful politician with superb communication skills who the mass media fell for hook, line and sinker.
Once Kennedy soured on the CIA, things got dicey. The ideal president quickly became less ideal as his independence grew.
The Imperial State and mass media always feared and hated Richard Nixon, a poker player who kept his cards hidden and who surrounded himself with loyalists and outsiders, a rogue politician who could upstage the Imperial State’s agenda by private diplomacy (opening relations with China) or expanding wars of choice (the invasion of Cambodia).
Nixon’s cabinet was well-stocked with Establishment pros, but they were largely figureheads when it came to the bold private diplomatic moves Nixon favored. In other words, Nixon was the Imperial State’s nightmare president.
Just to show that the Imperial State plays no favorites in party affiliations, the State and its media organs also hated Jimmy Carter, another independent who wandered outside the “recommended guidelines” and had to be destroyed via endless mockery and the undermining of his initiatives.
(Maintaining the circus entertainment of party politics is a core function of the mass media.)
The Imperial State was deeply distrustful of Reagan, hence the constant media mockery and the attempt to unseat him via the Iran-Contra Affair. But Reagan was smart enough to surround himself with insiders (Cap Weinberger, James Baker et al.) and popular enough to fend off the constant media attacks, much to the media’s intense frustration (hence their mocking description of Reagan as the “Teflon president.” How dare he survive our campaign to undermine and destroy him!)
Bush II was no Bush I, but he followed orders and never strayed from the “recommended guidelines.” The same can be said of Bill Clinton and Barack Obama, telegenic communicators in the Kennedy mold.
Needless to say, the Imperial State and its media organs loathe Trump, the loosest cannon imaginable. Hillary Clinton had proven herself a reliable water carrier for the Imperial State, and so her election was elaborately planned and staged: potentially loose cannon Bernie Sanders was shivved in the primaries by the Democratic Party, and the champagne was chilled for Hillary’s victory.
Alas, the party was crashed in a most unforgivable fashion, and the Imperial State’s war on Trump has been unremitting and ham-handedly obvious.
Democracy is the coat of paint applied for PR purposes to the Imperial State. “Democracy” is only tolerated if it follows the approved script. The Republic is good PR, but the Empire makes the rules and the scripts that elected officials follow, and woe to anyone who wins an election they were supposed to lose or who strays too far from the “recommended guidelines.” (Imperial enemies must remain enemies until the Empire decides otherwise.)
Democracy has always been a “problem” for the Imperial State to manage, but now it is a hindrance to Imperial pretensions and power that is setting up an existential crisis unlike any other in American history.
* * *
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Tyler Durden
Mon, 10/07/2019 – 23:45 - Crisis In The Skies: 2019 Airline Bankruptcies On Pace For "Fastest Growth" In History
Crisis In The Skies: 2019 Airline Bankruptcies On Pace For “Fastest Growth” In History
As macroeconomic headwinds develop in the global economy, something odd, but not really surprising, is occurring: the bankruptcy rate for airliners across the world is exploding, at a pace never seen before, reported Reuters, citing a new report from the International Bureau of Aviation (IBA).
Airline bankruptcies generally start to gain pace right before an economic downturn, and during a recession, which means the latest surge in bankruptcies, from companies like India’s Jet Airways, British travel group Thomas Cook and Avianca of Brazil, suggests 2020 could be a disastrous year for the global economy.
IBA states, “2019 has seen the fastest growth in airline failure in history,” with about 17 carriers filing for bankruptcy protection as of Sept.
With peak summer travel season winding down, many airliners are dealing with high debt loads, earnings deterioration, dwindling cash, higher fuel costs, a stronger dollar, and global economic turmoil that is squeezing the most vulnerable carriers.
“The last quarter of the year tends to see more failures during the northern hemisphere winter,” Phil Seymour, IBA’s chief executive, told Reuters.
Seymour said the strong dollar had severely damaged emerging market carriers.
Reuters notes that the series of bankruptcies has helped cash-strapped carriers acquire planes and airport slots at heavily discounted prices.
France’s Aigle Azur and XL Airways, Germania, Flybmi, and Adria of Slovenia, are some of the carriers that filed for bankruptcy this week.
With the Boeing 737 MAX fleet grounded, cash-strapped carriers have been exploring substitutes, and it’s the bankrupted carriers’ fleets that those companies are seeking to acquire.
Irish low-cost carrier Ryanair has been dealing with financial distress tied to the grounding of the MAX. The carrier decided to acquire Airbus A-320s that were previously leased by bankrupted Thomas Cook, as a substitute for the MAX.
“Opportunities crop up out of things like the failure of Thomas Cook,” Ryanair group CEO Michael O’Leary told Reuters.
“We’re talking to a number of the leasing companies about taking some of those Airbus aircraft and putting them into Lauda next summer,” he said.
And judging by the Reuters Global Airline Index, the industry has been in a downturn since the start of 2018.
The Reuters Global Airline Index topped out in late 4Q17, several months before JPMorgan Global Manufacturing PMI peaked at the beginning of 1Q18.
With a global economy expected to weaken through year-end, more airline carriers will likely file for bankruptcy protection. Just imagine what will happen to the industry if a worldwide trade recession starts next year.
Tyler Durden
Mon, 10/07/2019 – 23:25 - How Washington's Food Subsidies Have Helped Make Americans Fat And Sick
How Washington’s Food Subsidies Have Helped Make Americans Fat And Sick
Farm subsidies are perhaps the ultimate, but secret, third rail of American politics. While entitlements are discussed out in the open, farm subsidies are rarely talked about – even though they are the most expensive subsidy Washington doles out.
All told, the U.S. government spends $20 billion annually on farm subsidies, with approximately 39 percent of all farms receiving some sort of subsidy. For comparison, the oil industry gets about $4.6 billion annually and annual housing subsidies total another $15 billion. A significant portion of this $20 billion goes not to your local family farm, but to Big Aggie.
(Note that this $20 billion annual farm subsidy figure doesn’t take into account the 30+ years of ethanol subsidies to the corn industry nor export subsidies to U.S. farmers issued by the USDA.)
The government never properly explains why this is. Certainly small farmers are growing their crops at enormous risk. However, it’s not clear that agriculture is any different than other high-risk industries – especially because the United States is blessed with some of the most fertile farmland in the world, and a highly skilled labor force.
Subsidies don’t just cost taxpayers, an expense that might properly be justified by showing a return on investment. Subsidies also provide powerful disincentives against innovation, as well as cost effectiveness and diversification of land use.
There is also a strong case to be made that farm subsidies are a major driver of the obesity and cancer epidemic in the United States. Every time Washington interferes in the private sector, they are picking winners and losers. The winners chosen are companies producing food that’s high in calories and low in nutritional density – and that helps make Americans sick and fat, because it distorts what food is available at what price.
While President Trump has sometimes discussed reducing farm subsidies, the solution to the problem is much more radical – the total elimination of all farm subsidies from the federal budget.
Food Subsidies in the United States
There have long been federal programs in the United States propping up the agricultural sector. For example, the Morrill Act of 1862 established land-grant universities with a focus on agricultural education. The Smith-Lever Act of 1914 similarly provided funding for agricultural education.
The first program similar to the farm subsidies of today was the Federal Farm Loan Act of 1916. This still exists in the form of the Farm Credit System, which currently holds $280 billion in assets. This Act came out of a study done by progressive Republican President Theodore Roosevelt. At this time, rural Americans made up the bulk of the United States’ population.
The Act allowed farmers to borrow 50 percent of the value of their land and 20 percent of the value of their improvements. Loans were available between $100 and $10,000 and amortized between five and 40 years. It was intended to provide poor farmers with an alternative source of credit from large banks. The successor of this Act, the Farm Credit System, currently provides approximately a third of the credit in rural America.
The Great Depression, the New Deal and Farm Subsidies
As with many other aspects of American economic life, farming changed with the advent of the Great Depression and the New Deal, which, at least it was argued, sought to minimize the impact of the worst parts of the Depression.
The Agricultural Marketing Act of 1929 was passed on the watch of Republican President Herbert Hoover, widely blamed for the Depression and maligned as having “done nothing” to protect Americans from it. This Act created the Federal Farm Board, which was itself a modification of the Federal Farm Loan Board.
Hoover believed that he could halt the collapse of agricultural prices by buying, selling and storing surplus grains. Another method to prevent the collapse was to lend to farmers on generous terms. Farmers used the loans to purchase seed and feed. This was particularly important in the South, where farmers were just getting over a drought.
This had a very predictable effect: Farmers began raising more crops than they knew they could sell. They knew the government would buy whatever they produced, and the bill contained no production limit. Deflation was not countered and the Depression worsened for American farmers. The federal government spent $500 million before the program was abolished in 1933.
The real expansion of federal subsidies for the American farmer began under President Franklin Delano Roosevelt. Programs enacted under FDR’s New Deal included price supports for commodities, regulations on the supply of farm commodities, barriers to prevent importation of farm commodities, and crop insurance programs. These programs, while modified and greatly expanded, form the basis of current federal farm policy. There is no other way to describe this than central planning.
The first major program passed by FDR as part of the New Deal was the Agricultural Adjustment Act of 1933. This was the somewhat infamous program that had the government paying farmers to not plant crops, to dump out milk and the like when people were going hungry in the streets. Not only did it look bad, it was also declared unconstitutional in 1936, in the United States v. Butler case, on the grounds that the Constitution made agricultural regulations a state matter. This was in the ancient days, when the Supreme Court declared acts unconstitutional when the Constitution did not authorize them to do so.
The first replacement was the Soil Conservation and Domestic Allotment Act of 1936. This paid farmers to plant fewer crops on the basis that it was preventing topsoil erosion. A more straightforward replacement, the Agricultural Adjustment Act of 1938, preserved many of the earlier provisions of its 1933 cousin, and was passed at a time when the Supreme Court was more amenable to the wishes of President Roosevelt following his proposed threat to pack the court with up to 15 judges. This new version of the Agricultural Adjustment Act mandated price supports for broad sections of American agriculture. When challenged in court, the Supreme Court ultimately upheld it under (what else) the commerce clause.
Commodity price and income supports are now a staple in the federal budget. But what does the money go toward?
Where Do Farm Subsidies Go?
Farm subsidies are often painted as the last refuge of the American small farmer. But even a close examination of where farm subsidies go reveals that nothing could be further from the truth. The 10 largest recipients of aid receive between $14 million and $23.7 million, averaging $18.2 million, or approximately $1.8 million per year for what are giant agricultural combines. Part of this is a deliberate result of United States agricultural policy – after the Second World War, farmers were told to “get big or get out.”
Let’s look at some startling facts about U.S. farm subsidies:
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Over 6,000 farming companies and combines received more than $1 million federal aid in the years between 2008 and 2018.
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This constituted a total of over $11 billion in this 10-year period.
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18 different farming entities received over $10 million.
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Over $626 million went to urban areas – i.e., places with over 250,000 residents and precisely zero farms.
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The five most populated cities in America (New York, Los Angeles, Chicago, Houston and Philadelphia) received a collective $18 million in farm subsidies. 25 percent of all subsidies went to someone receiving over $250,000 in subsidies.
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The 150 most affluent zip codes in America received $5 million in subsidies in 2017 alone.
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What’s more, the government is still paying farmers to not farm.
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12 members of Congress received as much as $637,059 in farm subsidies in 2017.
All of this adds up to underscore the true nature of America’s food subsidy system: It’s a massive welfare program directed at the rich and affluent, which artificially distorts food prices for everyone.
Perhaps worst of all, the massive farm subsidies aren’t keeping people out of debt. American farmer debt currently stands at $409 billion. Wheat is receiving $45.9 billion in subsidies while corn is getting $112 billion. Farmers received $12 billion in aid from the Trump Administration to help hedge against potential losses from the trade war with China. While it’s difficult to say to what extent any of this is vote-buying, it is worth noting that Iowa is the second-largest recipient of USDA subsidies, only slightly behind Texas.
But if the story here were simply one of government largesse, this would be a very short article, indeed. The story is much deeper, and goes to the heart of health and wellness in the United States.
Earl Butz: Father of the Modern Food Subsidy System
The subsidy system might have had its problems, but the system really went off the rails with the advent of Earl Butz as Secretary of Agriculture under both President Richard Nixon and President Gerald Ford. He was the one who pioneered the fundamental change in farm subsidies. No longer would farmers be paid to take fields out of production. Instead they would be paid for producing absolutely insane amounts of corn.
He was the man who coined the term “get big or get out.” He also urged farmers to use every available square inch of land – to plant “from fencepost to fencepost.” This change in policy had a dramatic impact on the world of American agriculture. Small family farms were crushed and big agribusiness became the norm rather than the exception.
Part of the change was due to the high cost of food during the early 1970s. The Nixon Administration (and thus, Butz) were taking heat over soaring food prices. Thus, Butz decided to switch from paying people not to grow food to paying them to grow it. He brokered the sale of 30 million tons of grain to the Soviet Union to keep prices afloat. This was not simply to help farmers, but also to keep them in the Nixon fold – there was a strong fear that they would vote for 1972 Democratic Party candidate George McGovern.
Butz argues in the documentary King Corn that he provided a valuable service to both the American consumer and the American farmer: both the dramatic reduction of the cost per calorie of food and also the dramatic increase in the efficiency of farming techniques. Indeed, this generation spends less feeding itself than any other in human history.
Still, as we will discuss in greater detail below, one of the unintended side effects of the newly crowned “King Corn” was the development of high fructose corn syrup – the consequences of which have been a disaster for the American diet.
The Emblem of USDA: The Food Pyramid
Everyone is familiar with the food pyramid, the alleged template for a healthy diet produced by the United States Department of Agriculture in 1992. The original Food Pyramid urged Americans to eat as many as 11 servings of carbs per day, in addition to another four servings of fruit (i.e., more carbs). Meat, poultry, eggs, fish, beans and nuts were to total only two to three servings per day between all of them.
Fats – even healthy ones like avocados and olive oil – were to be “used sparingly.” They were lumped into the same group as sugars and sugary snacks. Healthy plant-based oils like olive or avocado oil were not separated from less healthy processed plant-based oils like canola or corn oil.
The USDA’s latest version of the Food Pyramid is known as MyPlate, and some insight into how it was created and what purpose it serves can be found with the previous pyramid (the Eating Right Pyramid) and why it was discontinued. The Eating Right Pyramid, the original Food Pyramid, was replaced due to industry concerns from beef and poultry farmers that their product was not being presented properly.
An alternative to MyPlate is the Healthy Eating Plate from the Harvard School of Public Health. This stresses whole grains, healthy proteins and fats, drinking water and other sugar-free drinks, and adequate amounts of vegetables.
Harvard School of Public Health Department of Nutrition Chair Walter Willett claimed that, “like the earlier U.S. Department of Agriculture pyramids, MyPlate mixes science with the influence of powerful agricultural interests, which is not the recipe for healthy eating”.
Dr. Marion Nestle, former chair of the Department of Nutrition, Food Studies, and Public Health at New York University stated that, “There’s a great deal of money at stake in what these guidelines say.”
A lot of money is in the subsidies themselves, but there is also a trickle-down effect. Cheap corn, for example, has totally changed the world of agriculture and food. Cows never ate corn until farmers started getting money to grow it everywhere. This is what makes the 99-cent hamburger possible. Fish, likewise, are another animal that would never eat corn if left to its own devices, but humans have trained them to eat corn because it is arguably the world’s cheapest and most plentiful food source – not due to naturally occuring market forces, but because of corn subsidies.
If you’re horrified by factory farming – the penning in of tons of cows, pigs and other animals in tiny spaces – you can lay the blame right at the feet of farm subsidies. Such practices are simply not economically viable or sustainable without massive subsidies or corn. Ethanol is another creation of the agriculture-industrial complex.
The bottom line is that the USDA Food Pyramid and its antecedents and successors have more to do with feeding money into the agricultural system – where the subsidies are – than it does with teaching Americans proper nutrition.
Corn Subsidies Are a Killer
Corn subsidies are big business in the United States, and this can be seen in the explosion of a simple ingredient now found in everything from sodapop to hot dogs – high fructose corn syrup, also known as HFCS.
Between the development of HFCS in 1970 and 1990, the consumption of HFCS skyrocketed by 1,000 percent. It’s not just that HFCS is in just about everything. It’s also that HFCS makes a number of things possible that otherwise wouldn’t be – think the now ubiquitous 99-cent three-liter bottle of sodapop available at every big-box supermarket around the country.
The New York Times reported that junk food is the largest source of calories in the United States. The top 10 calorie sources in the United States are, according to Harvard Medical School:
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Grain desserts (everything from cake to granola bars)
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Bread
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Chicken
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Sodapop, energy drinks and sports drinks
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Pizza
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Alcohol
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Pasta
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Mexican food
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Beef
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Dairy-based desserts
This means that at least four out of the 10 top calorie sources in the American diet are junk food. Most of them are based on ingredients from highly subsidized food groups like corn, soybeans, wheat, and rice. Barely any subsidies exist for fruit and vegetables, the foods that Americans are ostensibly supposed to fill half of their plates with.
A study by the Centers for Disease Control and Prevention, published in JAMA Internal Medicine in August 2016, was able to document a connection between heavily subsidized food sources and obesity. The study found that those subsisting on a diet of heavily subsidized foods were 37 percent more likely to be obese than those who did not. Belly fat, abnormal cholesterol, and high blood sugar levels were likewise linked to a diet heavy in foods subsidized by the federal government.
Fruits and vegetables are called, in a typical act of government doublespeak, “specialty crops.” They claim approximately 75 percent of all farmland in the United States, but net a scant 14 percent of all subsidies. These are primarily grown by small family farmers. Some subsidy bills stipulate that farms receiving subsidies for commodity crops like corn and wheat cannot grow “specialty crops.”
The Coming Tax on Meat
Meat, in particular red meat, has long been maligned as a source of unhealthy calories. However, the paleo movement, the low-carb movement, and the extreme carnivore diet movement have all championed meat, in particular red meat, as the healthiest thing you can possibly eat. Most health conscious people these days are, at the very least, avoiding simple sugars and opting for healthy complex carbohydrates in their diet, if not drastically reducing the number of calories they get from carbs.
Whether or not carbs are good for you or not is a source of continued debate, and largely centers around which carbs and how much of them. Likewise, dairy is enjoying a renaissance among people who tout the health benefits of whole milk and raw milk.
Taxing meat in the manner of cigarettes and sugar, however, is becoming an increasingly mainstream idea. The proposal is linked not just to a desire to exert even more control over what Americans eat, but also with (of course) carbon emissions and saving the environment.
Beyond the simple fact that a tax on meat would be yet another example of government overreach, there are other problems with a meat tax. It is also based on a subjective and dubious interpretation of the effects of meat on both the environment and on personal health. Such a tax would, like existing taxes on sugar and tobacco products, disproportionately impact the poorest Americans.
Given the poor job that the United States Department of Agriculture has done with attempting to dictate what people eat with the Food Pyramid, it’s unlikely that they’re going to hit paydirt with a meat tax.
Subsidies Cause Cancer
The consequences of subsidies are far reaching when one considers the correlation with obesity. While tobacco use is responsible for one-third of all cancer cases, obesity is considered responsible for another third. Put more directly, there is a health epidemic in the United States similar to tobacco, but rather than a public campaign against it, it’s subsidized by the federal government.
This is what led a presidential report commission on cancer to attack food subsidies in much the same way that it did tobacco.
There is another aspect to subsidizing unhealthy food, which will become increasingly expensive: healthcare. As the federal government creeps more into healthcare, the more you and other taxpayers will be subsidizing (again) by paying for treatments for those who are clinically obese, diabetic, or otherwise unhealthy from the nutrient-poor foods promoted by the United States government through its subsidies. This creates a maniac cycle, whereby the federal government subsidizes foods that make people sick and fat, then subsidizes the healthcare of sick and fat people. In all likelihood, this will all be paid for disproportionately by people who are neither sick nor fat.
It’s important to point out that more government intervention, in the form of taxation or subsidizing “healthy” (according to some) foods, is not the answer – it’s the problem. Subsidies and other government handouts are invariably shaped by those with the most political influence. The ultimate programs always bear little resemblance to how they are touting through what are effectively PR campaigns in the nominally independent media.
In the age of digital media, it has never been easier for the average person to learn what they need to know about feeding themselves and their family in the most healthy way possible. Government subsidies are not required for this and, as we have shown, have very much the opposite impact on public health. It is time for a revolution in the world of food subsidies – one of drastic reduction and ultimately the elimination of these wasteful and counterproductive programs.
Tyler Durden
Mon, 10/07/2019 – 23:05 -
- Bizarre: Colombian Navy Rescues Shipwrecked Smuggling Suspects Found Floating On Cocaine Bales
Bizarre: Colombian Navy Rescues Shipwrecked Smuggling Suspects Found Floating On Cocaine Bales
In a bizarre story reported by the Colombian Navy, personnel from the Colombian Navy and Coast Guard found drug smugglers clinging to cocaine bales in shark-infested Pacific Ocean waters after their vessel was hit by a rogue wave last week.
The incident occurred in the waters near Tumaco in Colombia, about 30 nautical miles from shore, said Captain Jorge Maldonado of Colombia’s Task Force Against Drug Trafficking.
Maldonado said navy and coast guard personnel were conducting surveillance and maritime control operations when they discovered the shipwreck. He said the smugglers were clinging onto cocaine hydrochloride bales for at least seven hours. In total, the navy and coast guard recovered 2,789 lbs of cocaine.
“The coastguard arrived, and these three people were floating on a material that by its characteristics resembled drugs,” Maldonado said.
Footage of the rescue was posted on the official Twitter account of the Colombian Navy. Several pictures show three men floating in the water, surrounded by black bales of cocaine. Navy personnel can be seen tossing in life preserves to the smugglers. The men and the cocaine were eventually extracted from the water and hauled to a support base on land for further analysis.
La @ArmadaColombia logra el rescate de tres colombianos y la incautación de 1.265 kilogramos de clorhidrato de cocaína, en aguas del Pacífico colombiano. #FNP #ProtegemosElAzulDeLaBandera, Leer más 👉 https://t.co/Nnl8zBFhWw pic.twitter.com/6tkUTX3FWh
— Armada de Colombia (@ArmadaColombia) September 29, 2019
https://platform.twitter.com/widgets.js
Maldonado said the floating bales tested positive for cocaine hydrochloride.
He said the smugglers were en route to Central America. It’s likely, he said, the men left the Port of Tumaco, which is one of the primary exit points of cocaine from the country.
The United Nations Office on Drugs and Crime (UNDOC) indicated in a 2018 report that, Colombia is the top producer of cocaine in the world.
A majority of the cocaine is smuggled by boat to the US.
The UNDOC report also said Colombia’s 2018 cocaine output hit record highs as demand from the US soared.
Back in July, we reported on a container ship that had around $1 billion worth of cocaine hidden in containers at a Philadelphia port after having stopped in Colombia. We also learned the vessel, the MSC Gayane, is owned by JP Morgan, was seized by US authorities.
And as long as stocks blast to new highs, partly funded by endless stock buybacks and easy money policies by the Federal Reserve, cocaine demand will continue to soar on Wall Street, giving Colombian drug cartels more of a reason to continue boosting output.
Tyler Durden
Mon, 10/07/2019 – 22:45 - "Paper Money Systems Have Always Wound-Up With Collapse And Chaos", Buffett Senior
“Paper Money Systems Have Always Wound-Up With Collapse And Chaos”, Buffett Senior
Authored by Simon Black via SovereignMan.com,
Warren Buffett, despite his extraordinary investment success, has a rather famous and long-standing love/hate relationship with precious metals.
Maybe it started with his dad – Congressman Howard Buffett of Nebraska – who, as a staunch advocate for the gold standard, argued to his colleagues on Capitol Hill that “paper money systems have always wound up with collapse and economic chaos.”
Warren himself acquired a record-setting 128 million ounces of silver back in the late 1990s… which he later sold at a profit in the early 2000s.
But to listen to him talk about precious metals these days, he’s always negative.
Buffett often quips that if you took the world’s entire supply of gold and melted it together, it would form a cube of about 68 feet (~21 meters) per side and be worth around $9 trillion.
With that same $9 trillion, you could buy every share of Apple, Disney, Google, Microsoft, JP Morgan, Exxon Mobil, all the farmland in the United States, all the developable land in Manhattan, and still have more than a trillion dollars left over.
This is Buffett’s central argument: gold doesn’t produce anything. So it’s much better to invest in a productive asset like a business, farmland, etc.
Sure, I’d rather own a profitable, productive asset than a pile of metal.
But Buffett is completely wrong to compare gold to productive assets… they’re apples and oranges.
Gold isn’t an ‘investment’. It’s an insurance policy against paper currencies will lose value over time. So a MUCH better comparison for gold is CASH.
Using Buffett’s same thought experiment, would an investor with $9 trillion rather have all that money sitting in a bank earning 0%? Or buy all the productive assets I mentioned above?
Clearly it’s more attractive to own productive assets than cash sitting in a bank.
Now, most people obviously don’t have hundreds of billions or trillions of dollars to invest.
But foreign governments, pension funds, central banks, and Sovereign Wealth Funds do.
And if it were so easy to simply buy up all the farmland in the United States, or every share of Disney, etc. they would have done it already.
But life isn’t so black and white. Negotiating and closing a very large investment deal takes a lot of time and hard work.
Buffett himself understands this. That’s why he made only ONE major acquisition in 2017 (a chain of gas stations called Pilot Flying J) and ZERO in 2018.
Buffett’s company has $700 billion in assets and over $100 billion in cash; it’s extremely difficult to find enough large, credible deals to invest that much capital.
And large institutions like central banks and foreign governments have the same problem.
I have friends who are senior executives at some of these institutions who manage hundreds of billions of dollars; they’re constantly on the lookout for sensible deals where they can invest billions of dollars at a time.
But those opportunities are rare. And in the meantime, they need to park the money somewhere.
Just like Warren Buffett’s father, many of these institutional managers understand that paper money loses value over time.
Especially now, in places like Europe and Japan, interest rates are actually NEGATIVE. And any large fund that has a mountain of euros or yen is bleeding money due to negative yields.
So let’s go back to Buffett’s analogy:
Imagine you’re a large Sovereign Wealth Fund with $500 billion in cash.
Of course you’re searching for high quality, productive assets that you can acquire. But you know it’s going to take 10-15 years to fully invest that capital.
So in the meantime, do you:
(A) keep the $500 billion in a paper currency that has a 100+ year track record of losing value and being abused as a political prop?
Or
(B) keep at least a portion of the investment capital in gold– an asset with a 5,000+ year history of maintaining its value?
For large institutions, Option B is extremely compelling.
And THAT’S what has been primarily driving gold prices over the past year.
Central Banks and foreign governments like China, Russia, Turkey, Qatar, Colombia, etc. have been loading up on gold because it’s a better, safer, long-term alternative to holding dollars and euros.
As a result, the price has risen.
Clearly they’re still holding plenty of dollars (and euros). But they’re increasingly diversifying their reserves.
They can see that the US government will continue having $1+ trillion deficits. They can see that the Federal Reserve will continue debasing the currency with interest rate cuts…
(and the European Central Bank recently made interest rates even MORE negative.)
They can see that diplomatic and trade relations with the US are strained.
So it would be foolish for a foreign government to keep 100% of its reserve assets denominated in US dollars.
They can also see that gold is practically the ONLY asset that isn’t at an all-time high.
Almost ever major stock market, property market, and bond market around the world is at/near an all-time high.
Gold has had a good run lately. But its price (in US dollars) would still need to rise another 25% before surpassing its previous all-time high.
This is what’s likely to keep fueling demand for gold: very large sovereign wealth funds and central banks don’t have a lot of options, and gold is one of the only assets that makes sense for them.
This will likely continue to be the case.
It’s worth noting that, even though gold is not a ‘productive asset’, the price of gold over the past 20 years has beaten the stock market, including Warren Buffett.
From September 1999 through September 2019, the S&P 500 returned a solid 229%, including dividends. And the stock price of Buffett’s company (Berkshire Hathaway) is up an astonishing 536% over the same period. But the price of gold has surpassed even Buffett, returning 591%.
Tyler Durden
Mon, 10/07/2019 – 22:25 - Watch Paralyzed Man Walk Thanks To Brain-Controlled Exoskeleton Suit
Watch Paralyzed Man Walk Thanks To Brain-Controlled Exoskeleton Suit
A paralyzed man has spent nearly two years testing a mind-controlled robotic suit. Now French researchers, who are responsible for building the exoskeleton, have published a new report documenting the proof-of-concept demonstration.
Researchers at the University of Grenoble, located in southeastern France, published the latest results of the suit and a video last week.
The suit was operated by a 30-year-old man, only identified as Thibault. He was able to control the suit with his brain, moving the suit forward while he was strapped to the exterior of it.
Thibault told BBC that his latest robotic walk was like being “the first man on the moon.” The tests were held in a heavily secured lab at Clinatec and the University of Grenoble.
The robotic suit is controlled by two implants that were surgically placed in Thibault’s head. The implants are wireless, able to beam brain activity to a nearby computer where artificial intelligence converts the signals into instructions for the exoskeleton.
Thibault has been paralyzed for four years. He’s been training with the researchers for two years, at several labs to control the 140-pound exoskeleton suit.
Researchers first trained an algorithm to interpret brain signals and convert them into commands for the suit. Thibault was able to play a game similar to Pong, while the algorithm learned his brain activity and turned the signals into commands to control a digital paddle where he hit a ball. The training started as early as 1H17 and went on for at least two years.
Once the algorithm learned Thibault’s brain commands, researchers strapped him to mechanical exoskeleton with 14 moveable joints. He first used the arms of the machine to tap levers, and it was only until recently, he was able to walk the machine forward.
As shown in the video below, Thibault’s exoskeleton suit was suspended with cables from the ceiling during the test.
Researchers have said the technology will be refined in the coming years and could be a replacement for wheelchairs in the next decade. But within the next 5-years, it’s likely the technology will be used to control wheelchairs.
“Our findings could move us a step closer to helping tetraplegic patients to drive computers using brain signals alone, perhaps starting with driving wheelchairs using brain activity instead of joysticks and progressing to developing an exoskeleton for increased mobility,” Professor Stephan Chabardes, a neurosurgeon from the CHU of Grenoble-Alpes, said.
And it’s almost guaranteed that when millennials start retiring in 2045-2055, mind-controlled robotic suits will be fully matured and have already entered series production decades before. Can you imagine, elderly millennials in exoskeleton suits walking to the corner store for some avocado toast?
Tyler Durden
Mon, 10/07/2019 – 22:05 - China Services PMI Tumbles To 7-Month Lows
China Services PMI Tumbles To 7-Month Lows
With China coming back from Golden Week celebrations, all eyes are on PMI data (expected to be flat from August) as a sign that things are not getting any worse ahead of this week’s trade negotiations in Washington.
This is the last PMI print for September (after a mixed bag from official data across services and manufacturing):
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China Official Manufacturing PMI small rise to 49.8
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China Official Non-Manufacturing small drop to 53.7 (lowest since Nov 2018)
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China Caixin Manufacturing notable rebound to 51.4 (highest since Feb 2018)
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China Caixin Non-Manufacturing dropped to 51.3 (lowest since Feb 2019)
The weakness is somewhat surprising given the position China might want to portray during this week’s negotiations.
Source: Bloomberg
For the first time since Sept 2017, Services PMI is weaker than Manufacturing.
The level of positive sentiment in the manufacturing sector was little-changed from August, while optimism in the service sector slipped to its lowest since May. In both cases, expectations were among the lowest seen in the series history.
Commenting on the China General Services PMI data, Dr. Zhengsheng Zhong, Director of Macroeconomic Analysis at CEBM Group said:
“The Caixin China General Services Business Activity Index dipped to 51.3 in September from 52.1 in the previous month, the lowest reading in seven months.
1) Among the gauges included in the survey, the one for new business rose further, hitting the highest point since January 2018 and reflecting stable demand in the services sector. The increase was partly driven by new product launches. The gauge for new export business continued to drop, reflecting that growth in new business was mainly driven by domestic demand.
2) The employment measure increased significantly, reaching a level unseen since January 2017. The increase in employment was linked to growth in new orders.
3) The measure for input prices increased to the highest in a year, mainly driven by rising costs for labor, fuel and raw materials. However, the gauge for prices charged by service providers dipped marginally, indicating fierce competition. The gauge for business expectations dropped as rising costs restrained company confidence. “
China’s notable credit impulse recovery is perhaps helping overall as China’s Composite PMI rises for the third month in a row…
Source: Bloomberg
“The Caixin China Composite Output Index increased to 51.9 in September from 51.6 in August, mainly driven by strengthened growth in the manufacturing sector. The gauge for new orders increased, hitting the highest level since February 2018. Employment increased at the fastest pace since January 2013, driven by the service sector. Backlogs of work had not expanded this quickly since April 2018. The pressure on companies from rising costs was great and business confidence dipped further.
“China’s economy showed signs of marginal recovery in September, as the labor market improved and domestic demand increased at a faster pace. However, fluctuations in exchange rates, and rising costs of labor and raw materials increased pressure on companies, which restrained business confidence. Due to previous destocking and capacity-reduction activities, constraints on companies’ production capacity became more severe and backlogs of work increased noticeably, which will help companies restore their investment. After a fast slowdown in previous quarters, China’s economic growth began to show signs of stability.”
Since China has been closed, US equities have dumped and pumped back to almost unchanged but the Trump administration placed eight Chinese tech companies on a blacklist after the US close today.
Source: Bloomberg
Chinese officials have confirmed that Vice Premier Liu He has departed China for his visit to Washington later in the week (so at least that’s a positive).
Finally, we note that gold has bounced modestly as the Chinese return from celebrations, fitting with the historical pattern of weakness into and through Golden Week, and strength after.
Tyler Durden
Mon, 10/07/2019 – 21:54 -
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