- Exposing The Plan For A Global Dystopia
Exposing The Plan For A Global Dystopia
Authored by Alasdair Macleod via GoldMoney.com,
Global policy planners intend to deliver replacements for both dollar hegemony and fossil fuels. Plans may appear uncoordinated and in their early stages, but these issues are becoming increasingly linked.
A monetary reset incorporating state-sponsored cryptocurrencies will enable exchange controls to be introduced between nations by separating cross-border trade payments from domestic money circulation. The purpose will be to gain greater control over money and to direct its investment into green projects.
The OECD will build on current tax disclosures to make everyone’s income and capital known to governments and therefore readily taxable, money destined to kick-start economic growth. Under the guidance of supranational organisations, governments will redirect investment into green technology. The objective, particularly for Europeans, is to neutralise Russia’s increasing dominance of the global energy market by becoming carbon neutral by 2030.
But perhaps as Robert Burns put it, “the best-laid schemes o’ mice an’ men gang aft agley”. They are based on Keynesian fallacies, but cannot be ignored.
Introduction
There appear to be policy areas being driven by statist responses to events, encouraging global institutions to take on a coordinating role. It means deeper levels of centralised planning by unaccountable bureaucrats. Assuming their plans continue to gain credence, we could end up with a dystopian world where supranational bodies direct individual governments to conform. We are already on this road to perdition. The OECD has coordinated attempts by governments to restrict the freedom of their citizens to avoid taxes by forcing over a hundred jurisdictions to automatically supply information on the financial affairs of every citizen, irrespective of nationality and where they reside.
By doing so, it has removed the necessity for governments to moderate their tax demands for fear that individuals will move their money out of reach. Information on private affairs are now exchanged automatically by banks, lawyers, financial advisors and accountants, without the individual’s knowledge. As a result of the introduction of the OECD’s common reporting standard, the organisation claims that over $85bn of additional tax revenue has been raised. The intention is to raise more, much more.
This has been the OECD’s mission for some time, leading the way for other supranational organisations to carve out roles for themselves. Ones that come to mind are the IMF, which with a green agenda intends to prioritise investment funding for alternatives to fossil fuels both directly and indirectly through the World Bank and the regional development banks. Subsidiary roles are likely to be played by other UN divisions, useful for binding emerging market nations to the plans.
Central banks acting in concert could have a new role of coordinating a monetary reset, which as we can deduce from Mark Carney’s speech at Jackson Hole in August is already being discussed. We shall start by looking at the state of current monetary policies, their failure, and the drive to replace them with something else, before addressing the energy question.
The monetary problem
There are two categories of folk who think everything to do with economics and money are not much to worry about; the disinterested public and the investment management community. Their livelihoods depend upon it. Another category, libertarians, Austrian economists, bitcoin fans, gold bugs and readers of and contributors to agglomerating sites such as ZeroHedge have views ranging from sceptical to downright catastrophic. Not known to many is another, the most important category, which is very worried indeed, and that is governments and their central banks.
These are the people quietly talking about a big-picture reset, those that know the post-Breton Woods fiat dollar system is no longer fit for purpose. They see escalating debt, interest rates failing to stimulate, and economic stagnation. They see a mismatch between international trade and the use of the dollar as a global settlement medium. They don’t talk about it much, to do so would frighten us, the lowly ruminants.
I was ruminating on this recently after Max Keiser, of the Keiser Report on RT, asked me what I thought of Mark Carney’s speech at Jackson Hole in August about a global monetary system to replace the dollar. I replied something about Carney about to retire, and presumably feeling slightly freer to express the concerns which he must share with his friends at the Bank for International Settlements, and various other monetary panjandrums who have observed the obvious: their cosy world of money-printing doesn’t work, is unlikely to ever work, and must be reformed to give them more control.
Since then my thoughts have turned to the reset problem in a broader sense. The assumption must be that time is available for such an event to be planned, or at least pre-planned as an insurance policy against monetary failure. In either event, it is putting the cart before the horse, because when a credit crisis hits it invariably takes the authorities by surprise, and it looks increasingly close in time. The priority will not then be monetary evolution but economic and financial rescue.
That point having been made, from the central bankers’ point of view, what is to be done? The obvious answer is to rig the game by changing the rules. As Keynes said, when the facts change, he changed. That way, they think they might dispose of the failing system and replace it with an updated one that suits their policy purposes better. With a bit of luck, declining confidence in the old will be replaced by a new paradigm, something that will allow them all, politicians and central bankers, to claim success for saving the Western world from a potential monetary crisis.
The problem is they don’t know how to do it, and they don’t yet know what the new paradigm will be. There is no unity on the matter, because for the Fed and the US Government it involves an unacceptable loss of monetary and political power. The Chinese, in partnership with the Russians, want to do away with the dollar, while the Europeans are leading themselves to a socialist dystopia at odds with Trump’s America, while being frightened of the Russian bear in the east.
This is why influencers like Carney can only hypothesize about a new monetary set-up involving a reduced role for the dollar. Central banks are exploring cryptocurrencies. It is reported that seven out of ten of them are researching the possibilities. That won’t save fiat currencies, but it might give central banks greater control over how their fiat currencies are used. Perhaps they think a state issued cryptocurrency can replace unadorned fiat. But then that raises two issues: if the existing fiat is failing it is likely a new state-sponsored cryptocurrency risks having a credibility problem from the outset and even if the public does accept it, its future issue will have to be strictly limited and the cycle of bank credit properly addressed.
But get it right and markets could be tamed, the logic goes. And somehow, a global cryptocurrency-based monetary system for international trade could replace the failing post-Bretton Woods monetary system reserved on the US dollar. For policy makers, it is becoming an urgent question, as a reading of Carney’s Jackson Hole speech makes clear.
Specifically, in his speech Carney identified the existence of a global liquidity trap nullifying interest rate policy with three elements: a global savings glut tied up in dollars, a reduction in the scale of sustainable cross border flows and “fattening of the left-hand tail and increasing the downside skew of likely economic outcomes”. This last element of gobbledegook appears to translate into an acknowledgement of the failure of current interest rate policy to stimulate economic recovery, which cannot be admitted in plain English.
Carney’s problem, besides the veiled admission of policy failure, is he ignores the fact that America needs increasing quantities of foreign dollar ownership to fund its escalating budget deficit, without which the dollar fails, and term interest rates will soar. If he and his cohort push policies intended to redeploy funds that are otherwise destined for the dollar and US Treasuries, they will face strong opposition from the US Treasury and being based on the dollar, the likely collapse of the whole fiat edifice.
As for a reduction in cross border flows, that is a function of falling cross-border trade, not money. The reason cross-border trade has collapsed is because of the US-Chinese trade spat and its knock-on effects. Even if we pass on the gobbledegook of his third point, it is difficult for an independent observer not to take Carney’s speech as indicative of desperation, ivory-tower economic error or both.
Being based on Keynesian macroeconomic beliefs, we can take the evidence of economic error for granted, particularly since these beliefs have consistently failed to deliver any credible solution. It is the element of desperation we must explore further. If Carney feels a sense of desperation (and his speech reeks of it) then his fellow central bankers will as well. But instead of just abandoning failed policies, a bridge is required towards a new set of policies, a monetary reset. And it will almost certainly involve a greater suppression of the role of markets and an increase in state control over money and how it is used.
For central bankers, there is a fear that the emergence of a competing private sector crypto-payments system, even linked to a basket of fiat currencies, will challenge national currencies. They would have to be pretty dopey not to see that Bitcoin in particular is educating the masses about the moral fraud behind the expansion of fiat money. The challenge will be to come up with a credible alternative, completely under the control of a few major central banks. But first, the purpose of a state-backed cryptocurrency must be settled.
For every nation other than America, evolution from the failing post-Breton Woods monetary system is about reducing the role of the dollar in trade settlement and freeing up capital needlessly tied up in dollars. Before the invention of cryptocurrencies, this would presumably have been achieved through a combination of an evolutionary process and increasing use of currency swaps to enhance liquidity, particularly in euros and renminbi, to replace the dominance of dollars in reserve balances.
The facilitation of foreign trade appears to be the role most likely to be destined for a state-issued cryptocurrency. Initial swap lines of state-sponsored cryptocurrencies would be proportionate to the trade between existing currency blocks. It could then be deployed for trade settlement, which would require it to be made available to commercial banks. We then have two currency versions: an existing fiat currency which circulates domestically and a separate blockchain based currency reserved for international use. With an onshore and offshore version, there can be two interest rates suitably set for their applications, so long as arbitrage routes are severely restricted, with the offshore version trading at a premium.
Old hands in Britain will be familiar with the basic concept, before Margaret Thatcher removed exchange controls. To monetary planners, there are several perceived benefits from such a scheme, particularly for the Eurozone. By separating trade settlement from domestic currency circulation, de facto currency controls are introduced, permitting access to the state crypto currency to non-domestic trading entities and banks, while denying its use in the domestic economy. Importantly, the expansion of bank credit would be retained for the domestic currency only, managed through a two-tier interest rate policy.
Any investment in foreign currencies would require the payment of the premium that applies on the crypto version of the currency. The prospects of an international run against a currency such as the euro would recede, as the existing liquidity for international trade is replaced by a centralised, highly managed, trade-related cryptocurrency.
For policy makers at the ECB it must be a tempting solution if it can be made to work. It would give them greater monetary control overall, and they could attempt to stimulate the Eurozone economy by deploying deeper negative rates without the fear of a failing exchange rate.
From America’s point of view these moves or anything like them will almost certainly be strongly resisted. They need foreigners to buy dollars to fund the budget deficit. And they are now experiencing the flaws of US isolationism and Trumpian trade policies, which are already leading to a contraction and potential reversal of foreign flows into US Treasuries.
China would be an interested observer of these developments. She has been planning to issue a cryptocurrency of her own, which could allow her to internationalise a crypto version of the renminbi more rapidly than it has managed with its existing renminbi. Russia has already ditched the dollar for geopolitical reasons and is trying to gain control over the energy market from a moribund OPEC.
To summarise, discontent with the post Bretton Woods monetary system and the disproportionate role of the dollar are likely to be the reasons why so many central banks are looking at cryptocurrency solutions. But as stated at earlier in this article, it assumes pre-planning, those best-laid schemes of mice and men, are not overtaken by events.
Crypto and gold
There can be little doubt that monetary policy is descending towards crisis, and a major bank failure could even occur in the next few months. If we find ourselves facing another Lehman moment, the priority will be to stabilise markets first, and then currencies as needed at a time of widespread negative interest rates and bond yields.
As insurance against such an event, the majority of central banks retain physical gold as part of their reserves. In Europe, Germany France and Italy hold significant quantities of gold which the monetary authorities at the ECB might in theory wish to deploy as the backing for a common cryptocurrency. But this is unlikely to be a preferred option, because central banks always retain their gold reserves (leasing aside) and only use them for monetary purposes as a last resort.
To re-introduce gold backing would deny all credibility to neo-classical macroeconomic theory, which relies on achieving an inflation target consistent with maximising employment. Given the need for a rapid expansion of global money supply as a policy response to the next credit crisis or to finance escalating government debt, the purchasing power of state-issued currencies will almost certainly decline while that of gold will rise. A currency credibly linked to gold would therefore also rise, assuming it acts as a proper gold substitute. A gold standard fixed at the current rate of $1500 would be seen as strongly deflationary if gold goes any higher.
It is therefore probably true that no Western central bank would contemplate such a move in current economic conditions. If, in time, a credit and systemic crisis threatens the destruction of unbacked state currencies, and the event causes conventional thinking in the central banking community to discard inflationism, that would be a different matter. But that is far from the current situation.
In any event, a far higher gold price would be required to fix fiat currencies sustainably to gold. Even China, which has been accumulating physical gold and encouraging its people to do so as well, is too hooked on monetary and credit expansion as the principal means of driving its economy to contemplate such a move for its own economy. However, the accumulation of gold reserves by many of China’s Asian trading partners suggests some sort of gold backing for a cross-border settlement medium is likely instead of delivering physical gold, and this is where China’s plans for a new state-sponsored cryptocurrency may eventually be heading.
The conflict over energy
As is the case with the global monetary system, global energy markets face enormous change with both the EU and supranational organisations, such as UNCTAD, the UN’s conference on trade and development, pushing a policy of dropping carbon fuels for green alternatives. Furthermore, the original agreement whereby Saudi Arabia agreed to sell its oil for dollars, giving US banks control over monetary surpluses from all OPEC’s oil sales, is no longer appropriate because the energy world has radically changed since that deal was struck in 1973.
That agreement has been the central plank to the dollar’s role as a reserve currency. Since 1973, the Soviet Union has collapsed and under President Putin, Russia has emerged as the largest exporter of oil and gas combined. Furthermore, as America’s victories in the Middle East are proving to be only pyrrhic, Russia’s influence is spreading across the region, forming alliances with Iran, Turkey and Syria. China is the region’s most important energy customer, and with its silk road projects is also increasing its influence on the region.
America’s response to these developments is lacking focus. It now has precious little real business in the region other than arms supplies, and under President Trump America has become isolationist. Furthermore, Trump wished to disengage militarily from the region, while the intelligence and military establishment wanted to increase their commitments. The gaps in US policy have been quietly exploited by Russia and China to great effect.
The EU sees US leadership failing while the Russian beast to its east are getting stronger. The lessons of Russia wielding power over Ukraine by cutting off energy supplies have been noted: energy security is a long-term threat to the EU and Russia is on the verge of controlling Middle Eastern supplies as well. Furthermore, the lessons of China’s economic successes through non-democratic government control will also have been noted as something for European statists to emulate.
The EU’s response to the energy threat from Russia has been to adopt a radical green agenda without reservation. Despite about 98% of transport and logistics being delivered by diesel and gasoline, some member states in the EU are banning the sales of internal combustion engines as motive power from as soon as 2030. This accelerated path to zero emissions will require massive investment. Clearly this is being viewed as economically stimulative at a time of declining optimism over the general economic outlook.
These views are articulated in UNCTAD’s Trade and Development Report 2019, Financing a Global Green Deal[iii]. The authors argue that internationally coordinated action between governments pursuing reflationary monetary and fiscal policies, while restricting international capital flows, will generate the economic growth and capture the resources to finance the investment. The charts below are indicative of their thinking, and are copied from Page 56 of the report.
This is one of several examples in the report. Here, it is argued that a combination of higher minimum wages and increasingly progressive rates of taxation to redistribute wealth to lower earners leads to greater economic growth, in this case by boosting consumption of the masses at the expense of the few. It’s pure Keynesianism.
Similar arguments are made for increasing government spending on goods and services and increasing spending on welfare to further boost consumption. More extensive use of capital controls to restrict destabilising investment flows and to make them available for green investment instead are recommended (pp. 125-129). Central banks are encouraged to direct quantitative easing in favour of green investment, and through regulation impose higher risk margins on bank exposure to fossil fuel related investments and loans (pp. 153-156).
It amounts to an extension and escalation of failed inflationist policies, but the underlying point is it transfers free markets to statist management on a global scale not seen before. The ambition is for a few supranational organisations, not accountable to anybody, to act as an informal world government. It also accords fully with how central banks are likely to restructure their currencies
Welcome to Dystopia.
Conclusion
Failing monetary policies and the accelerated disposal of carbon-based in favour of carbon-neutral energy provide the foundations for a dystopian future. Together, they are excuses for yet greater inflationism and the rapid socialisation of national economies and private capital.
Clearly, a number of supranational bodies expect to coordinate these policy areas above the heads of individual governments. A monetary reset will replace a failing dollar-based system, and failing economies will be boosted by state-directed green investment.
Given that a significant cyclical credit and systemic crisis is overdue, its occurrence will have a major effect on how matters actually proceed. People who value individual freedom and privacy, those horrified by Orwell’s Nineteen Eighty-Four and Hayek’s The Road to Serfdom, could find themselves wishing for an even more radical outcome: the complete destruction of the fiat currency system and of the whole statist command-and-control apparatus.
Tyler Durden
Fri, 11/08/2019 – 23:45 - Pentagon Official Warns China Exporting Killer AI Drones To Middle East
Pentagon Official Warns China Exporting Killer AI Drones To Middle East
US Defense Secretary Mark Esper warned during a speech on artificial intelligence at the National Security Commission on Artificial Intelligence public conference Tuesday (Nov. 05) that China is exporting a series of “next-generation drones” to countries in the Middle East, reported Flight Global.
“Beijing has made it abundantly clear that it intends to be the world leader in AI by 2030,” Esper said. “While the US faces a mighty task in transitioning the world’s most advanced military to new AI-enabled systems, China believes it can leapfrog our current technology and go straight to the next generation.”
Middle East countries banned from purchasing advanced US drones due to a weapons embargo are increasingly gravitating towards Chinese defense manufacturers.
The drone sales are supporting China’s expansion across the Middle East, which is home to many strategic US military bases, as well as, future and current routes for Beijing’s Belt and Road Initiative.
“As we speak the Chinese government is already exporting some of the most advanced military aerial drones to the Middle East, as it prepares to export its next-generation stealth UAVs when those come online,” Esper said. “Also, Chinese weapons manufacturers are selling drones advertised as capable of autonomy, including the ability to conduct lethal, targeted strikes.”
China’s AI killing drones are more frequently ending up in the skies above Saudi Arabia, Jordan, Nigeria, Yemen, Iraq, and the United Arab Emirates.
Chinese drone exports to the region have risen in the last decade, cutting into the US’ market share, something that has angered the Pentagon.
Esper didn’t explicitly point out which AI killing drones were in question. However, the CASC Rainbow is the most popular Chinese drone that is currently being exported to the Middle East.
Tyler Durden
Fri, 11/08/2019 – 23:25 - East Germany Remains A Powerful Example Of What Happens After We "Smash Capitalism"
East Germany Remains A Powerful Example Of What Happens After We "Smash Capitalism"
Authored by Ryan McMaken via The Mises Institute,
This week marks the thirtieth anniversary of the fall of the Berlin Wall. Decades later, the wall remains a symbol of the violence employed by socialist states, and a reminder that the egalitarian workers’ paradise of East Germany was so hated by its residents that the state had to build a wall to keep residents in.
It is ironic, then, that only a generation later, Americans are becoming increasingly enamored with socialism. According to a recent Gallup poll, 43 percent of Americans say socialism is a “good thing.” It’s unclear how many of those respondents can actually define socialism. Some believe socialism to simply be policies that promote equality. Others define it using the more historically orthodox view: government ownership of the means of production.
There is no doubt, however, that a vocal and not-insignificant minority – of the sort represented by Jacobin magazine, for example – advocates for the total destruction of capitalism.
When American democratic socialists who want to “smash capitalism” say they like “socialism,” of course, they are likely to add that they don’t want the sort of socialism they had in East Germany. They want kindly, happy, well-lit socialism. Not the gray, dour, socialism of the Eastern Bloc.
I have no doubt this is indeed what they want, although that’s what the founders of East Germany and the Soviet Bloc thought they would get too. Many of them no doubt truly believed they were leading the way to a kinder, gentler, more equal society.
After all, up until the 1980s, the socialists of the Eastern Bloc were still entertaining the idea that they could deliver a higher standard of living to ordinary people than could the “decadent” economies of the West.
In 1959, of course, Richard Nixon and Nikita Khrushchev literally debated whether the West or the Communist world could deliver the best kitchen appliances to the general public.
Obviously, the West won that debate, although many Western socialists failed to get the memo. Right up until the end (of the Soviet Bloc) the highly influential American economist Paul Samuelson maintained that communist economies worked perfectly well. As David Henderson noted in 2009:
Samuelson had an amazingly tin ear about communism. As early as the 1960s, economist G. Warren Nutter at the University of Virginia had done empirical work showing that the much-vaunted economic growth in the Soviet Union was a myth. Samuelson did not pay attention. In the 1989 edition of his textbook, Samuelson and William Nordhaus wrote, “the Soviet economy is proof that, contrary to what many skeptics had earlier believed, a socialist command economy can function and even thrive.”
As it turned out, the socialist economies — designed to deliver an easier life to consumers and workers — were really vehicles of impoverishment, not to mention environmental degradation.
A Lasting Legacy of Poverty
To this day — thirty years after re-unification — the standard of living is lower in the parts of Germany that were once part of East Germany. In 2014, for example, the Washington Post reported how East Germany has lower levels of disposable income, high unemployment rates, and is generally less prosperous. This in turn has led to the old East Germany having fewer young people, many of whom move west for better jobs. Fortune‘s Chris Matthews went on to observe “If you look at statistics such as per capita income or worker productivity, they also point to the large disparity in economic development between east and west.”
And Claudia Bracholdt further notes: “Today, Germany’s east has many structural problems similar to those of countries like Greece and Spain, though on a much smaller scale.”
During the Cold War, numerous opponents of Communism pointed to Germany as the perfect example of how soviet-style communism destroyed economic prosperity. But that was then. Nowadays, the East German regime is gone, and Germany is, relatively speaking, one of the most market-oriented economies on earth. Eastern Germany shares a government with western Germany. So, why is eastern Germany still poor compared to its western German neighbors?
The answer lies in the fact that even though the legal and political systems in eastern Germany are the same as in the West, the East suffers from the fact that it lost out on decades of capital accumulation and growth in worker productivity while under the boot of the Soviets.
The German case offers the most excellent comparison of course, because prior to World War II, western and eastern Germans enjoyed similar political systems for many decades. Moreover, the western and eastern Germans were similar both ethnically and culturally. Thus, the comparison allows us to focus on regime differences in the age of the Cold War.
We can look beyond just the East Germans as well. We might ask ourselves, for example, why Poland, with its Western orientation and long tradition of parliamentary and decentralized governments remains so relatively poor.
The same might be said of the Czech Republic as well, where the principal city, Prague, was once the second city of the Austrian Empire and was a center of European wealth and culture. The Czechs too, have never regained their relative place in terms of European wealth.
Part of the explanation lies in the fact that the legacy of an abandoned political system can live on for decades even after regime change. As Nicolás Cachanosky has observed in the context of South American regimes:
Institutional changes … define the long-run destiny of a country, not its short-run prosperity. … For example, as China opened parts of its economy to international markets, the country started to grow, and we are now seeing the effects of decades of relative economic liberalization. It is true that many areas in China continue to lack significant freedoms, but it would be a much different China today had it refused to change its institutions decades ago.
Clearly, the fact that the old Eastern Bloc countries have moved toward liberalization has set those countries on a path toward greater economic prosperity. That by itself, however, cannot put it on a par with countries that never suffered the effects of decades of communism.
Smash Capitalism: And Replace it With What?
The experience of the Eastern Bloc should serve to inoculate us against the idea that a market based system can be replaced wholesale, and that a decent standard of living can still be achieved.
It is one thing to advocate for a five-percent increase in government spending on the pension system. It’s another to advocate for the nationalization of the banking sector or — even worse — expropriating every major industry. Yet, the smash-capitalism crowd thinks they want the latter.
But the US isn’t as far from the socialist end of the spectrum as many think. After all, the United States is itself already far down the road of the typical Western welfare state. Contrary to the persistent myth that the United States is some sort of laissez-faire free-for-all, the US welfare state in terms of social spending is already comparable to that of Canada, Australia, the Netherlands, and Switzerland. If the Netherlands is “socialist,” then so is the United States.
Yet we’re being told the US needs to just move a little more to left to be like its European “peers.” Except the US is already there. So how much further must it be moved in the direction of even more government control of its economy?
The socialists give no answer beyond “we’ll let you know when we get there.”
But it is not necessary to completely destroy capitalism to ensure a less prosperous future. That is, we need not become a clone a East Germany to share at least a share of its fate. Suffice it to say, the further a regime move in the direction of the “egalitarian” states of the old communist world, the worse the impoverishment will be.
Tyler Durden
Fri, 11/08/2019 – 23:05 - Mapping China's Global Debt-Serfdom-ification
Mapping China's Global Debt-Serfdom-ification
According to research recently published by the Kiel Institute for the World Economy, there are seven countries in the world whose external loan debt to China surpasses 25 percent of their GDP. Three (Djibouti, Niger and The Republic of the Congo) are located in Africa, while four (Kyrgyztan, Laos, Cambodia and the Maldives) are in Asia.
Yet, as Statista’s Katharina Buchholz notes, the world map of debt to China amassed through direct loans (excluding debt holdings and short-term trade debt) shows that a majority of countries heavily in debt to China are in Africa, but that Central Asia and Latin America follow close behind.
You will find more infographics at Statista
While China’s overseas lending is coordinated by the country’s centralized government, it is often poorly documented, which the researchers of the paper were trying to change.
They found that debt by direct loans started to grow immensely only around 2010 and that loans by China often come at higher rates and with shorter grace periods for the receiving country than comparable loans from the OECD or the World Bank.
The authors also caution that countries heavily in debt to China are at risk of defaulting.
In the 1970s, a lending boom which consisted of similar contracts offered by U.S., European and Japanese banks had led to this outcome for a number of developing countries which were trying to improve their infrastructure, according to the research.
Meanwhile, external debt to China through portfolio holdings is concentrated in developed nations and passes the threshold of 10 percent of GDP for Germany and the Netherlands. It amounts to between 5 and 10 percent of GDP in the U.S., Canada, France, the UK and Australia.
Tyler Durden
Fri, 11/08/2019 – 22:45 - Three Deep State Confessions On Syria
Three Deep State Confessions On Syria
Authored by Brad Hoff via The Libertarian Institute,
First, all the way back in 2005 — more than a half decade before the war began — CNN’s Christiane Amanpour told Assad to his face that regime change is coming. Thankfully this was in a televised and archived interview, now for posterity to behold.
Amanpour, it must be remembered, was married to former US Assistant Secretary of State James Rubin (until 2018), who further advised both President Obama and former Secretary of State Hillary Clinton.
Washington was “actively looking for a new Syrian leader” looong before the civil war in Syria began pic.twitter.com/3wOrtl29Od
— In the NOW (@IntheNow_tweet) November 1, 2019
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“Mr. President you know the rhetoric of regime change is headed towards you from the United States… They’re granting visas and visits to Syrian opposition politicians,” Amanpour told Assad in a 2005 CNN interview.
Next, a surprisingly blunt assessment of where Washington currently stands after eight years of the failed push to oust Assad and influence the final outcome of the war, from the very man who was among the early architects of America’s covert “arm the jihadists to topple the dictator” campaign.
Myself and others long ago documented how former Ambassador to Syria Robert Ford worked with and funded a Free Syrian Army commander who led ISIS suicide bombers into the battlefield in 2013.
How is it that Robert Ford, one of the architects of the Islamist insurgency in #Syria and a man who tirelessly campaigned for the Al-Qaeda tied Ahrar Al-Sham to replace the Assad government, is now being so realistic and actually talking sense? (Interview Oct 10, 2019) pic.twitter.com/0ZWrndjbWK
— Walid (@walid970721) November 6, 2019
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Amb. Ford has since admitted this much (that US proxy ‘rebels’ and ISIS worked together in the early years of the war), and now admits defeat in the below recent interview as perhaps a reborn ‘realist’.
And finally, not everyone is as pessimistic on the continuing prospects for yet more US-led regime change future efforts as Robert Ford is above. Below is an astoundingly blunt articulation of the next disturbing phase of US efforts in Syria, from an October 31 conference at the Center for Strategic and International Studies (CSIS).
“The panel featured the two co-chairs of the Syria Study Group, a bi-partisan working group appointed by Congress to draft a new US war plan for Syria,” The Grayzone’s Ben Norton wrote of the below clip:
She made it a point to stress that this sovereign Syrian land “owned” by Washington also happened to be “resource-rich,” the “economic powerhouse of Syria, so where the hydrocarbons are… as well as the agricultural powerhouse.”
At a US gov-funded think tank, this official who oversaw Congress’ Syria Study Group outlines the continued regime-change strategy.
She says the US military “owned” 1/3rd of Syrian territory, including its oil/wheat-rich region. And the US is trying to block reconstruction funds pic.twitter.com/NIEJ9elxhs
— Ben Norton (@BenjaminNorton) November 5, 2019
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With images now circulating of Trump’s “secure the oil” policy in effect, which has served to at least force pro-interventionist warmongers to drop all high-minded humanitarian notions of “democracy promotion” and “freedom” and R2P doctrine as descriptive of US motives in Syria, the above blunt admissions of Dana Stroul, the Democratic co-chair of the Syria Study Group, are ghastly and chilling in terms of what’s next for the suffering population of Syria.
We are “preventing reconstruction aid and technical expertise from going back into Syria,” she stressed in her statement.
America is not finished, apparently, and it’s likely to get a lot uglier than merely seizing the oil.
Tyler Durden
Fri, 11/08/2019 – 22:25 - China Auto Sales Fall 6% In October As Global Auto Recession Shows No Signs Of Slowing
China Auto Sales Fall 6% In October As Global Auto Recession Shows No Signs Of Slowing
China has been spearheading the global recession in the automotive industry and, as one more month has come to pass, there are still no signs of the bleeding letting up.
As the U.S. and China continue to grapple with solving “Phase 1” of the allegedly upcoming trade deal, pressure remains on the automobile industry globally. For October, China retail passenger vehicle sales were lower by 6% year over year to 1.87 million units, according to the Passenger Car Association. October SUV retail sales also fell 0.7% y/y to 853,130 units.
Additionally, individual OEM data for China for October has also started to trickle in. Names like Toyota, Nissan and Mazda all posted low single digit drops for the month, while Honda was able to squeeze out a positive month.
Auto data aggregator Marklines reported:
- Nissan announced on November 6 that it sold 139,064 units in October in China, reflecting a 2.1% y/y decrease in sales.
- October sales of the 7th-generation Altima, Sylphy, Tiida, Qashqai and Kicks increased. Year-to-date (YTD) sales from January to October totaled 1,230,047 units, reflecting a 0.6% y/y decrease.
- Toyota sold 131,700 units in October, reflecting a 2.9% y/y decrease.
- YTD sales totaled 1,313,000 units, reflecting a 7.2% y/y increase.
- Honda announced that its October sales were 147,716 units, reflecting a y/y increase of 6.5%.
- Sales of the Accord, Crider, Vezel, Civic, CR-V and XR-V exceeded 10,000 units. The Civic topped 20,000 units in monthly sales for the fifth consecutive month from June to October. Sales of the Accord, Odyssey, CR-V, Inspire and Elysion, all of which are equipped with the SPORT HYBRID, a highly efficient double-motor hybrid power system, totaled 15,373 units. YTD sales totaled 1,271,286 units, reflecting a 15.2% y/y increase.
- On November 6, Mazda announced that sales in October reached 19,882 units, reflecting a 9.1% y/y decrease. YTD sales totaled 181,624 units.
Meanwhile, to add insult to injury, China’s Passenger Car Association said on Friday that NEV deliveries fell for a fourth straight month, down 45% in October as a result of subsidy cuts occurring while the global consumer remains under pressure.
China is considering cutting back on subsidies for electric vehicles, which have been the sole silver lining (if you can even call it that) over the last 12-18 months for the industry. The country has accounted for about half of the world’s sales of EVs and the last time the government cut subsidies, it triggered the first drop in EV sales on record.
That drop could arguably come at the most devastating time for China and the rest of the global auto industry, should it happen now.
Tyler Durden
Fri, 11/08/2019 – 22:05 - Nissan announced on November 6 that it sold 139,064 units in October in China, reflecting a 2.1% y/y decrease in sales.
- America's Endless Wars: "At West Point, Graduation Day Felt More Like A Tragedy Than A Triumph"
America's Endless Wars: "At West Point, Graduation Day Felt More Like A Tragedy Than A Triumph"
Authored by US Army Major Danny Sjursen (ret.) via TheNation.com,
Patches, pins, medals, and badges are the visible signs of an exclusive military culture, a silent language by which soldiers and officers judge each other’s experiences, accomplishments, and general worth. In July 2001, when I first walked through the gate of the US Military Academy at West Point at the ripe young age of 17, the “combat patch” on one’s right shoulder – evidence of a deployment with a specific unit – had more resonance than colorful medals like Ranger badges reflecting specific skills. Back then, before the 9/11 attacks ushered in a series of revenge wars “on terror,” the vast majority of officers stationed at West Point didn’t boast a right shoulder patch. Those who did were mostly veterans of modest combat in the first Gulf War of 1990–91. Nonetheless, even those officers were regarded by the likes of me as gods. After all, they’d seen “the elephant.”
We young cadets arrived then with far different expectations about Army life and our futures, ones that would prove incompatible with the realities of military service in a post-9/11 world. When my mother—as was mandatory for a 17-year-old—put her signature on my future Army career, I imagined a life of fancy uniforms; tough masculine training; and maybe, at worst, some photo opportunities during a safe, “peace-keeping” deployment in a place like Kosovo.
Sure, the United States was then quietly starving hundreds of thousands of children with a crippling sanctions regime against autocrat Saddam Hussein’s Iraq, occasionally lobbing cruise missiles at “terrorist” encampments here or there, and garrisoning much of the globe. Still, the life of a conventional Army officer in the late 1990s did fit pretty closely with my high-school fantasies.
You won’t be surprised to learn, however, that the world of future officers at the Academy irreparably changed when those towers collapsed in my home town of New York. By the following May, it wasn’t uncommon to overhear senior cadets on the phone with girlfriends or fiancées explaining that they were heading for war upon graduation.
As a plebe (freshman), I still had years ahead in my West Point journey during which our world changed even more. Older cadets I’d known would soon be part of the invasion of Afghanistan. Drinking excessively at a New York Irish bar on St. Patrick’s Day in 2003, I watched in wonder as, on TV, US bombs and missiles rained down on Iraq as part of Secretary of Defense Donald Rumsfeld’s promised “shock and awe” campaign.
Soon enough, the names of former cadets I knew well were being announced over the mess hall loudspeaker at breakfast. They’d been killed in Afghanistan or, more commonly, in Iraq.
My greatest fear then, I’m embarrassed to admit, was that I’d miss the wars in Iraq and Afghanistan. It wasn’t long after my May 28, 2005, graduation that I’d serve in Baghdad. Later, I would be sent to Kandahar, Afghanistan. I buried eight young men under my direct command. Five died in combat; three took their own lives. After surviving the worst of it with my body (though not my mind) intact, I was offered a teaching position back at my alma mater.
During my few years in the history department at West Point, I taught some 300 or more cadets. It was the best job I ever had.
I think about them often, the ones I’m still in touch with and the majority whom I’ll never hear from or of again. Many graduated last year and are already out there carrying water for empire. The last batch will enter the regular Army next May. Recently, my mother asked me what I thought my former students were now doing or would be doing after graduation. I was taken aback and didn’t quite know how to answer.
Wasting their time and their lives was, I suppose, what I wanted to say. But a more serious analysis, based on a survey of US Army missions in 2019 and bolstered by my communications with peers still in the service, leaves me with an even more disturbing answer. A new generation of West Point educated officers, graduating a decade and a half after me, faces potential tours of duty in… hmm, Afghanistan, Iraq, or other countries involved in the never-ending American war on terror, missions that will not make this country any safer or lead to “victory” of any sort, no matter how defined.
A NEW GENERATION OF CADETS SERVING THE EMPIRE ABROAD
West Point seniors (“first-class cadets”) choose their military specialties and their first duty-station locations in a manner reminiscent of the National Football League draft. This is unique to Academy grads and differs markedly from the more limited choices and options available to the 80 percent of officers commissioned through the Reserve Officers Training Corps (ROTC) or Officer Candidate School (OCS).
Throughout the 47-month academy experience, West Pointers are ranked based on a combination of academic grades, physical fitness scores, and military-training evaluations. Then, on a booze-fueled, epic night, the cadets choose jobs in their assigned order of merit. Highly ranked seniors get to pick what are considered the most desirable jobs and duty locations (helicopter pilot, Hawaii). Bottom-feeding cadets choose from the remaining scraps (field artillery, Fort Sill, Oklahoma).
In truth, though, it matters remarkably little which stateside or overseas base one first reports to. Within a year or two, most young lieutenants in today’s Army will serve in any number of diverse “contingency” deployments overseas. Some will indeed be in America’s mostly unsanctioned wars abroad, while others will straddle the line between combat and training in, say, “advise-and-assist” missions in Africa.
Now, here’s the rub: Given the range of missions that my former students are sure to participate in, I can’t help but feel frustration. After all, it should be clear 18 years after the 9/11 attacks that almost none of those missions have a chance in hell of succeeding. Worse yet, the killing my beloved students might take part in (and the possibility of them being maimed or dying) won’t make America any safer or better. They are, in other words, doomed to repeat my own unfulfilling, damaging journey—in some cases, on the very same ground in Iraq and Afghanistan where I fought.
Consider just a quick survey of some of the possible missions that await them. Some will head for Iraq—my first and formative war—though it’s unclear just what they’ll be expected to do there. ISIS has been attritted to a point where indigenous security forces could assumedly handle the ongoing low-intensity fight, though they will undoubtedly assist in that effort. What they can’t do is reform a corrupt, oppressive Shia-chauvinist sectarian government in Baghdad that guns down its own protesting people, repeating the very mistakes that fueled the rise of the Islamic State in the first place. Oh, and the Iraqi government, and a huge chunk of Iraqis as well, don’t want any more American troops in their country. But when has national sovereignty or popular demand stopped Washington before?
Others are sure to join the thousands of servicemen still in Afghanistan in the 19th year of America’s longest ever war—and that’s even if you don’t count our first Afghan War (1979–89) in the mix. And keep in mind that most of the cadets-turned-officers I taught were born in 1998 or thereafter and so were all of three years old or younger when the Twin Towers crumbled.
The first of our wars to come from that nightmare has always been unwinnable. All the Afghan metrics—the US military’s own “measures for success”—continue to trend badly, worse than ever in fact. The futility of the entire endeavor borders on the absurd. It makes me sad to think that my former officemate and fellow West Point history instructor, Mark, is once again over there. Along with just about every serving officer I’ve known, he would laugh if asked whether he could foresee—or even define—“victory” in that country. Take my word for it, after 18-plus years, whatever idealism might once have been in the Army has almost completely evaporated. Resignation is what remains among most of the officer corps. As for me, I’ll be left hoping against hope that someone I know or taught isn’t the last to die in that never-ending war from hell.
My former cadets who ended up in armor (tanks and reconnaissance) or ventured into the Special Forces might now find themselves in Syria—the war President Trump “ended” by withdrawing American troops from that country, until, of course, almost as many of them were more or less instantly sent back in. Some of the armor officers among my students might even have the pleasure of indefinitely guarding that country’s oil fields, which—if the United States takes some of that liquid gold for itself—might just violate international law. But hey, what else is new?
Still more—mostly intelligence officers, logisticians, and special operators—can expect to deploy to any one of the dozen or so West African or Horn of Africa countries that the US military now calls home. In the name of “advising and assisting” the local security forces of often autocratic African regimes, American troops still occasionally, if quietly, die in “non-combat” missions in places like Niger or Somalia.
None of these combat operations have been approved, or even meaningfully debated, by Congress. But in the America of 2019 that doesn’t qualify as a problem. There are, however, problems of a more strategic variety. After all, it’s demonstrably clear that, since the founding of the US military’s Africa Command (AFRICOM) in 2008, violence on the continent has only increased, while Islamist terror and insurgent groups have proliferated in an exponential fashion. To be fair, though, such counter-productivity has been the name of the game in the “war on terror” since it began.
Another group of new academy graduates will spend up to a year in Poland, Romania, or the Baltic states of Eastern Europe. There, they’ll ostensibly train the paltry armies of those relatively new NATO countries—added to the alliance in foolish violation of repeated American promises not to expand eastward as the Cold War ended. In reality, though, they’ll be serving as provocative “signals” to a supposedly expansionist Russia. With the Russian threat wildly exaggerated, just as it was in the Cold War era, the very presence of my Baltic-based former cadets will only heighten tensions between the two over-armed nuclear heavyweights. Such military missions are too big not to be provocative, but too small to survive a real (if essentially unimaginable) war.
The intelligence officers among my cadets might, on the other hand, get the “honor” of helping the Saudi Air Force through intelligence-sharing to doom some Yemeni targets—often civilian—to oblivion thanks to US manufactured munitions. In other words, these young officers could be made complicit in what’s already the worst humanitarian disaster in the world.
Other recent cadets of mine might even have the ignominious distinction of being part of military convoys driving along interstate highways to America’s southern border to emplace what President Trump has termed “beautiful” barbed wire there, while helping detain refugees of wars and disorder that Washington often helped to fuel.
Yet other graduates may already have found themselves in the barren deserts of Saudi Arabia, since Trump has dispatched 3,000 US troops to that country in recent months. There, those young officers can expect to go full mercenary, since the president defended his deployment of those troops (plus two jet fighter squadrons and two batteries of Patriot missiles) by noting that the Saudis would “pay” for “our help.” Setting aside for the moment the fact that basing American troops near the Islamic holy cities of the Arabian Peninsula didn’t exactly end well the last time around—you undoubtedly remember a guy named bin Laden who protested that deployment so violently—the latest troop buildup in Saudi Arabia portends a disastrous future war with Iran.
None of these potential tasks awaiting my former students is even remotely linked to the oath (to “support and defend the Constitution of the United States against all enemies, foreign and domestic”) that newly commissioned officers swear on day one. They are instead all unconstitutional, ill-advised distractions that benefit mainly an entrenched national security state and the arms-makers that go with them. The tragedy is that a few of my beloved cadets with whom I once played touch football, who babysat my children, who shed tears of anxiety and fear during private lunches in my office might well sustain injuries that will last a lifetime or die in one of this country’s endless hegemonic wars.
A NIGHTMARE COME TRUE
This May, the last of the freshman cadets I once taught will graduate from the Academy. Commissioned that same afternoon as second lieutenants in the Army, they will head off to “serve” their country (and its imperial ambitions) across the wide expanse of the continental United States and a broader world peppered with American military bases. Given my own tortured path of dissent while in that military (and my relief on leaving it), knowing where they’re heading leaves me with a feeling of melancholy. In a sense, it represents the severing of my last tenuous connection with the institutions to which I dedicated my adult life.
Though I was already skeptical and antiwar, I still imagined that teaching those cadets an alternative, more progressive version of our history would represent a last service to an Army I once unconditionally loved. My romantic hope was that I’d help develop future officers imbued with critical thinking and with the integrity to oppose unjust wars. It was a fantasy that helped me get up each morning, don a uniform, and do my job with competence and enthusiasm.
Nevertheless, as my last semester as an assistant professor of history wound down, I felt a growing sense of dread. Partly it was the realization that I’d soon return to the decidedly unstimulating “real Army,” but it was more than that, too. I loved academia and “my” students, yet I also knew that I couldn’t save them. I knew that they were indeed doomed to take the same path I did.
My last day in front of a class, I skipped the planned lesson and leveled with the young men and women seated before me. We discussed my own once bright, now troubled career and my struggles with my emotional health. We talked about the complexities, horror, and macabre humor of combat and they asked me blunt questions about what they could expect in their future as graduates. Then, in my last few minutes as a teacher, I broke down. I hadn’t planned this, nor could I control it.
My greatest fear, I said, was that their budding young lives might closely track my own journey of disillusionment, emotional trauma, divorce, and moral injury. The thought that they would soon serve in the same pointless, horrifying wars, I told them, made me “want to puke in a trash bin.” The clock struck 1600 (4 pm), class time was up, yet not a single one of those stunned cadets—unsure undoubtedly of what to make of a superior officer’s streaming tears—moved for the door. I assured them that it was okay to leave, hugged each of them as they finally exited, and soon found myself disconcertingly alone. So I erased my chalkboards and also left.
Three years have passed. About 130 students of mine graduated in May. My last group will pin on the gold bars of brand new army officers in late May 2020. I’m still in touch with several former cadets and, long after I did so, students of mine are now driving down the dusty lanes of Iraq or tramping the narrow footpaths of Afghanistan.
My nightmare has come true.
Tyler Durden
Fri, 11/08/2019 – 21:45 - California's Housing Nightmare Is Only Getting Worse
California's Housing Nightmare Is Only Getting Worse
When historians look back on contemporary California, one thing they’ll be bound to make note of is that the state’s developers bet on the wrong model.
Endless, suburban sprawl is coming back to haunt California in ways both major and minor. In densely populated communities across the state, traffic is horrible thanks to underdeveloped public transportation (this is especially true in LA). Most residents have accepted that deadly, devastating wildfires are just part of the deal now – bound to recur endlessly until the state’s population shrinks to the point that it no longer intermingles with the state’s vast swaths of woodland.
But it’s not just the apocalyptic images of fiery doom that have some of the state’s residents rethinking their decision to settle in California. The wildfires have had all kinds of ancillary effects: In parts of the state, PG&E is essentially shutting down large portions of the power grid in disruptive distributed blackouts intended to lower the fire risk.
Another impact has been the impact on California’s housing market. In a state where stiff regulations have strangled efforts to build more affordable housing, the median price or a house now tops out at around $600,000, more than twice the national level. The state has four of the five most expensive residential housing markets in the US – Silicon Valley, San Francisco, Orang County and San Diego (LA comes in 7th).
When adjusted for cost of living, California’s poverty rate is the worst in the country. The state accounts for 12% of the US population, but houses a quarter of its homeless.
For both owners and renters, Cali requires the highest share of household spending.
As Bloomberg explains, the path to this point was paved with bad local policy decisions made by the unaccountable Democrats who have ran the state for decades. They include: Outdated zoning laws and tax laws that benefit longtime homeowners at the expense of everybody else.
Earlier this week Apple announced that it would commit $2.5 billion to combat the housing crisis in California (a sum that seemed paltry compared to the immense value of the San Francisco real-estate market). Other tech giants who have long called the state home said they would pitch in to try and boost housing.
And in many ways, the rest of the country is becoming more like California, not less. During the longest economic expansion on record, the US built far fewer homes than in the past.
The working poor have always struggled with home ownership, but in California, it’s a problem for the working class as well. In Silicon Valley, teachers are having such a hard time affording rents that Facebook just pledged $25 million to build subsidized apartments for them.
Another Bay Area town decided to retrofit an old firehouse into barracks for its cops after they started taking turns sleeping in their cars.
Even the relatively wealthy are considered “cost burdened” in California.
The so-called NIMBYs who remain firmly in control of most local governments in California are often anti-development, and successfully shut down housing developments under the guise of protecting the environment or preserving “neighborhood character.”
Back in the 1970s, parts of the state were down-zoned, reducing the allowable population density, and encouraging sprawl.
Then there’s Proposition 13, a measure approved in the late 1970s that limits property tax increases on properties until they’re sold, meaning millions of homeowners are paying taxes on far less than their property is worth. Meanwhile, a bill seeking to allow more development in areas near employment and transport hubs is struggling for support in the California legislature.
At this point, the same unaccountable democrats who have long been beholden to the wealthy NIMBYs who dominate state politics will decide whether California changes its ways. But how much faith can we possibly place in them?
Tyler Durden
Fri, 11/08/2019 – 21:25 - 4 Reasons Why Socialism Is Becoming More Popular
4 Reasons Why Socialism Is Becoming More Popular
Authored by Alexander Zubatov via The Mises Institute,
The newfound openness of large numbers of Americans to socialism is, by now, a well-documented phenomenon. According to a Gallup poll from earlier this year, 43% of Americans now believe that some form of socialism would be good thing, in contrast to 51% who are still against it. A Harris poll found that four in ten Americans prefer socialism to capitalism. The trend is particular apparent in the young: another Gallup poll showed that as recently as 2010, 68% of people between 18 and 29 approved of capitalism, with only 51% approving of socialism, whereas in 2018, while the percentage among this age group favoring socialism was unchanged at 51%, those in favor of capitalism had dropped precipitously to 45%.
The same poll showed that among Democrats, the popularity of socialism now stands at 57%, while capitalism is only at 47%, a marked departure from 2010 when the two were tried at 53%. A YouGov poll from earlier this year showed that unlike older generations, which still preferred capitalist candidates, 70% of millennials and 64% of gen-Zers would vote for a socialist.
The question is why socialism now? At a time when the American economy under Trump seems to be chugging along at a nice clip, why are so many hankering for an alternative? I would suggest four factors contributing to the situation.
Factor #1: Ignorance of History
The first cause of socialism’s popularity, especially among the young, is an obvious one: having grown up at a time after the end of the Cold War, the collapse of Europe’s Eastern Bloc and China’s transition to authoritarian capitalism, “these kids today” — those 18 to 29 year-olds who were born around the last decade of the 20th century — don’t know what socialism is all about. When they think socialism, they don’t think Stalin; they think Scandinavia.
Americans’ — and especially young Americans’ — ignorance of history is well-documented and profound. As of 2018, only one in three Americans could pass a basic citizenship test , and of test-takers under the age of 45, that number dropped to 19%. That included such lowlights as having no clue why American colonists fought the British and believing that Dwight Eisenhower led the troops during the Civil War. Speaking of the war during which he actually led the troops, many millennials don’t know much about that one either. They don’t know what Auschwitz was (66% of millennials in particular could not identify it). Twenty-two percent of them had not heard of the Holocaust itself. The Battle of the Bulge? Forget it. Go back further in time, and the cluelessness just keeps deepening. Only 29% of seniors at U.S. News and World Report’s top 50 colleges in America — the precise demographic that purports to speak with authority about America’s alleged history of white supremacy — have any idea what Reconstruction was all about. Only 23% know who wrote the Constitution. So much for any notion that this is the most educated generation ever.
Closer to the theme — socialism — the same compilation of survey results includes the attribution of The Communist Manifesto’s “from each according to his ability; to each according to his needs” to Thomas Paine, George Washington or Barrack Obama. Moreover, among college-aged Americans, though support for socialism is pretty high, when these same young adults are asked about their support for the actual definition of socialism — a government-managed economy — 72% turn out to be for a free-market economy and only 49% for the government-managed alternative (yes, it looks from those numbers like there are a lot of confused kids who are in favor of both of the mutually exclusive alternatives). As compared to about a third of Americans over 30, only 16% of millennials were able to define socialism, according to a 2010 CBS/New York Times poll. And though I haven’t seen polling on this, I’d be willing to bet that a good bunch of these same students, if asked to say what the Soviet Union was, would have no clue or peg it as some sort of vanquished competitor of Western Union.
Compounding the problem still further is that the history that students are being taught increasingly falls into the category of “woke” history , America’s history of oppression as imagined by the influential revisionist socialist historian Howard Zinn . When socialists are writing our history books, the end result is preordained.
Given such ignorance and systematic distortion of history, is it any surprise that millennials who never lived through very much of the 20 th century don’t think socialism is all that bad?
Factor #2: Government Bungling
When we try to explain the socialist urge, we cannot lose sight of the fact that our government keeps interfering in the economy in ways that give people every reason to think the system is corrupt and needs to be trashed.
Take the skyrocketing cost of college, for instance. On the surface, this looks like greedy capitalist universities just keep on raising tuition, and since most college kids and their parents can’t pay the sticker price, almost 70% take out loans , saddling young people trying to start their careers with a mountain of debt (almost $30,000 on average). This results in all those socialist promises of free college or loan forgiveness sounding dandy. Underneath the surface, however, a huge part of the problem is federal grants and subsidized loans. If the government stopped footing a large part of their bill, more students and parents would be forced to pony up, which would mean, in turn, that colleges would not be able to keep hiking their prices without seeing a precipitous drop in enrollment. They would, instead, be forced to price themselves at some level that applicants could realistically pay, making college more affordable for a large segment of the American middle class.
Another simple example of the problem is Obama’s Emergency Economy Stabilization Act of 2008, colloquially known as the big bank “Bailout.” When kids grow up seeing government tossing out free lifelines to businesses that get themselves in dire straits, cause a massive financial crisis and, in the process, lose ordinary folks lots of jobs and homes, we can’t blame them for concluding that the system is rigged.
There are many more examples where these came from — our government frittering away trillions on foreign wars that increase instability throughout the world and end up costing us even more as we scramble to clean up our own messes is one expenditure that comes readily to mind — but the point is this: the more the government interferes in the economy to help out vested interests, the more reason many of us will see to ask government to interfere in the economy to help out the rest of us. The more reason we give anyone to think that capitalism means crony capitalism, the more they’ll clamor for socialism.
Factor #3: Universities’ Ideological Monoculture
The supporters of socialism are not simply the young, but rather, disproportionately those among the young who are college-educated. And the more college they have, the hotter for socialism they get. According to a 2015 poll , support for socialism grows from 48% among those with a high school diploma or less to 62% among college graduates to 78% among those with post-graduate degrees. Those on the left probably stop thinking hard about now and jump immediately to the conclusion that support for socialism is just a natural outgrowth of big brains and elite educations. But there is, in fact, a less obvious but ultimately far more compelling explanation that also manages to account for the general fact that more education correlates with more leftism: something — something bad — is happening at universities themselves to pull students toward the (far) left.
We have already seen above that what’s not happening at universities, even elite universities, today is a whole lot of education in important subjects like history. What we are getting instead is a lot of groupthink and indoctrination. Universities have always skewed a bit left. But beginning in the early to mid 1990s (for reasons I’ve explained in some detail elsewhere ), ideological diversity began to vanish entirely, as the leftward deviation turned tidal. As documented in a 2005 paper from Stanley Rothman et al., as of 1984, 39% of university faculty were left/liberal, and 34% were right/conservative. By 1999, those numbers had undergone a seismic shift: faculty was now 72% left/liberal and 15% right/conservative. Since 1999, the imbalance has become starker still. A comprehensive National Association of Scholars report from April 2018 from Prof. Mitchell Langbert of Brooklyn College, tracking the political registrations of 8,688 tenure-track, Ph.D.-holding professors from 51 of U.S. News & World Report’s 66 top-ranked liberal arts colleges for 2017, found that “78.2 percent of the academic departments in [his] sample have either zero Republicans, or so few as to make no difference.” Predictably, given the composition of the professoriate, survey data also indicates that students’ political views drift further leftward between freshman and senior year.
In light of this data, it should not be a surprise to us that students who have gone to college in this age of ideological extremism have come out radicalized and … socialized.
Factor #4: Coddled Kids
The young have always been more inclined to embrace pipe dreams — a lack of familiarity with the complicated way in which the world actually works, coupled with the college fix described above, will do that to most anyone — but there is a reason the mindset of today’s young’uns is particularly susceptible to the red menace. In last year’s The Coddling of the American Mind, the prominent social psychologist Jonathan Haidt and FIRE’s Greg Lukianoff describe the species of overprotective parenting and instilling of baseless and uncritical self-esteem by parents and educators alike that came to prevail as kids were growing up in the 90s and 00s. When we are raised in the belief we are wonderful just as we are, we never learn the critical life skills of self-soothing, working through anxiety, facing obstacles and overcoming adversity. The predictable result, as Haidt and Lukianoff observe, is a demand to be safeguarded — safe spaces, free speech crackdowns and so on. The state appears to many as the appropriate institution to provide this sort of “safety.”
If these four are the primary causes of socialism’s rapid surge in our midst, then the next logical question is what to do about it.
There is no easy answer, of course, but I would suggest that the radicalization of academia is the lynchpin issue. If we could succeed in reversing that tsunami, many dominoes would fall: we would be addressing the university monoculture that systematically distorts research, sends students veering hard left and graduates generations of left-orthodox clones who find their way into journalism, government, education, entertainment and other influential sectors driving public opinion and shaping the other three downstream issues factoring into socialism’s rise: government policy, educational philosophy and the manner in which history is taught. Many have observed that our universities are in crisis, but that crisis also represents an opportunity to avert the much larger socialist cataclysm that threatens to engulf us all.
Tyler Durden
Fri, 11/08/2019 – 21:05 - Visualizing Walmart's Domination Of The US Grocery Market
Visualizing Walmart's Domination Of The US Grocery Market
One wouldn’t expect the grocery department of a big box retailer to spark debate, but, as Visual Capitalist’s Nick Routley notes, Walmart’s high market concentration in the grocery space is doing just that.
By now, Walmart’s rise to the top of the retail pyramid is well documented. The Supercenters that dot the American landscape have had a dramatic ripple effect on surrounding communities, often resulting in decreased competition and reduced selection for consumers. Today, in some communities, Walmart takes in a whopping $19 for every $20 spent on groceries.
Today’s map, based on a report from the Institute for Local Self-Reliance, looks at which places in America are most reliant on Walmart to put food on the table.
The Weight of Walmart
Walmart has an unprecedented amount of control over the food system, now capturing a quarter of every single dollar spent on groceries in the United States.
Walmart isn’t just a major player — in some cases it’s become the only game in town. In a few of the communities listed in the report, Walmart commands a 90% market share and higher.
Here’s a breakdown of the top 20 towns dominated by Walmart in America:
While it’s more likely for a small town to become dominated by a single grocer, Walmart’s clout isn’t exclusive to rural America. Even in Springfield, Missouri — with a regional population of half a million people — the big box retailer still boasts a sizable market share of 66%.
Super Market Concentration
Under guidelines established by the Justice Department’s Antitrust Division, markets in which one corporation captures more than 50% of revenue are defined as “highly concentrated.” Walmart’s market share meets or exceeds this measure in 43 metropolitan areas and 160 smaller markets around the United States.
In some states, this trend is even more pronounced. In Oklahoma, for example, 86% of the state’s population lives in a region where Walmart has the majority market share in the grocery sector. In Arkansas — the home state of the megaretailer — half the population lives in this “highly concentrated” grocery market situation.
This degree of market concentration means that a retailer could cut certain products or manipulate prices without fear of losing customers. Worse yet, a company could close up shop and leave thousands of people without adequate grocery access.
An Interesting Caveat
There is a flip side to this story, however.
Walmart has shown a willingness to expand their grocery business to areas that were considered “food deserts” (i.e. low-income areas without easy access to a supermarket).
In a 2011 initiative, the retailer committed to open or expand 1,500 supermarkets across America to help give more people access to fresh food.
With the ground game clearly won, America’s largest grocer is now focused on dominating the next frontier of the grocery market – delivery. Stiff competition from companies like Amazon and Instacart will keep Walmart’s online market concentration in check for the time being.
Tyler Durden
Fri, 11/08/2019 – 20:45 - Nobel Prize Winner Suggests Blasting Nuclear Waste With Lasers
Nobel Prize Winner Suggests Blasting Nuclear Waste With Lasers
Authored by Haley Zaremba via OilPrice.com,
Many have made strong arguments for the potential of nuclear power to be the clean energy solution of the future. As the need to curb carbon emissions grows more dire, the ultra-efficient, zero-emissions energy provided by nuclear looks like a more and more obvious solution.
There are some major drawbacks, however, to nuclear energy. Of course, there is the ever-present concern of a nuclear meltdown that has kept civilians and politicians alike extremely wary of widespread nuclear energy production in the wake of high-profile tragedies like those at Fukushima, Three Mile Island, and Chernobyl. While the death toll from nuclear disasters is actually quite low, the long-term damage from these tragedies endures. In Japan, the government has been using so much water to keep the reactors at Fukushima from overheating since the 2011 disaster that they have run out of space to store it and have even considered dumping the radioactive wastewater into the Pacific Ocean. As for Chernobyl, well…you’ve all seen the miniseries.
And then there is the major issue of nuclear waste. As efficient and carbon-free as it is, nuclear power certainly isn’t the cleanest form of energy production, thanks to its extremely hazardous byproducts that can stay radioactive for millions of years. Making matters worse, there is still no scientific consensus on how to solve this issue. In the United States, the burden of paying to store and maintain nuclear waste deposits falls on the taxpayers, and the price tag is massive. As Oilprice reported last year in a report aptly titled “The Crushing Cost Of Nuclear Waste Is Weighing On Taxpayers,” keeping us safe from our own nuclear waste is extremely costly and will only grow more expensive the more waste we create. “Now, that price tag has reached a whopping $7.5 billion,” we reported, “and that number is only going to keep growing.”
But now, for the first time, there may be a solution to the previously unsolvable nuclear waste issue.
Nobel laureate Gérard Mourou has proposed a novel solution that smacks of science fiction and revolves around blasting nuclear waste with lasers.
Morou and his research partner Donna Strickland won their Nobel Prize in 2018 for their work with Chirped Pulse Amplification (CPA), a revolutionary invention that creates extremely rapid and ultra-powerful laser pulses with lots of different potential applications.
“The original research focused on applications like laser machining and eye surgery,” reports ExtremeTech, “but scientists could also use it to observe atomic processes that happen at almost unfathomable speeds. If we could speed it up a bit more, Mourou says CPA could have a use in processing nuclear waste, too.”
According to Mourou’s hypothesis, CPA could turn even the most nuclear waste we have sitting in secure storage facilities around the world, where it will otherwise remain radioactive for millions of years, into a substance so safe you could hold it in the palm of your hand. Of course, the CPA process will require a bit of tweaking to get to this point of capability.
“Currently, CPA can produce laser pulses as brief as one attosecond — that’s a billionth of a billionth of a second. To transmute nuclear waste into something safe, Mourou says you’d need to increase the pulse rate by roughly 10,000 times,” says ExtremeTech.
“That might sound like a tall order, but CPA itself was an order of magnitude increase over previous lasers. Another innovation like CPA, and we could be in the ballpark.”
The method would work by blasting nuclear waste with a laser pulse so strong and fast that it could knock protons out of the nuclei of dangerous substances like uranium 235 and plutonium 239, rendering them harmless. If this technology, which other experts agree makes sense in theory, could actually be invented and applied in the next couple of decades, it would be difficult to overstate the impact it would have on our energy sector and, indeed, the entire world. In order to avoid the fast-approaching tipping point for catastrophic climate change, we need to decarbonize fast and starting right now. Solving the problem of nuclear waste would make that a whole lot safer and more attainable.
Tyler Durden
Fri, 11/08/2019 – 20:25 - Hong Kong Student Dies From Injuries In First Fatality Linked To Protests
Hong Kong Student Dies From Injuries In First Fatality Linked To Protests
In what appears to be the first death of a protester stemming from the aggressive police tactics, a young student has died after sustaining a serious head injury during a fall from the third floor of a car park to the second while police carried out an aggressive dispersion operation to end a protest
According to the SCMP, Chow Tsz-lok, a second year computer science undergraduate student at Hong Kong University of Science and Technology fell from the car park in Tseung Kwan O as police fired off rounds of tear gas on Monday.
After being sent to Queen Elizabeth Hospital early on Monday morning, the student had been in a coma for several days as the swelling from a head injury intensified. Two operations undertaken to save his life failed, and he died Friday morning after his condition took a turn for the worse late Thursday. A cause of death wasn’t given.
At the time of death, sources said the pressure inside the victim’s skull had built up to five times normal levels because of the injuries.
A statement by HKUST released on Friday urged students to “stay calm and exercise restraint during this difficult moment” and avoid “conflicts or even tragedies” – fearful that protesters might tear apart the campus after blaming police for Chow’s death. All classes will be cancelled Friday in honor of Chow.
The university also repeated a warning for students to stay away from protests.
Unfortunately, security camera footage released on Wednesday by Link Reit, the owner of the Sheung Tak Estate car park where Chow took his fatal spill, didn’t capture his fall, leaving the exact circumstances behind his death a mystery.
The death occurred during the middle of end-of-semester graduation ceremonies for the university. During one graduation ceremony, some masters students wore black masks and held up their palms on stage – a gesture of support for the protest movement’s five demands.
HKUST President Wei Shyy shed tears during a ceremony where they briefly honored Chow after his death.
Another student who only gave his last name, Wong, told the SCMP that he was shocked by his fellow student’s death and said the graduation ceremonies should be cancelled: “It’s no longer a happy occasion for some graduates.”
Even Hong Kong Chief Executive Carrie Lam offered her sympathies to Chow and his family, and said the case needed to be investigated.
It’s still unclear whether the clashes between police and protesters had anything to do with Chow’s death. With no surveillance footage, it’s likely to remain a mystery.
Still, protesters are already calling it the first fatality linked to the demonstrations (and the police response). That label looks likely to stick. And demonstrators are already calling for more rallies in retaliation for Chow’s death.
Tyler Durden
Fri, 11/08/2019 – 20:05 - Paul Craig Roberts: "A Successful Coup Against Trump Will Murder American Democracy"
Paul Craig Roberts: "A Successful Coup Against Trump Will Murder American Democracy"
Authored by Paul Craig Roberts,
President Trump calls it a witch hunt, but it really is a coup against American democracy. The Democrats who want Trump impeached don’t realize this. They just want Trump impeached because they don’t like him. The impeach Trump people don’t understand that if the coup against the elected president succeeds, every future president will know that if he attempts to “drain the swamp” or bring any changes not acceptable to the ruling elite, he, too, will be destroyed. Voters who want real change will also get the message and give up trying to elect a president or members of the House and Senate who will be responsive to voters. It will mean the end of democracy and accountable government. Unhindered rule by the Deep State and associated elites will take democracy’s place.
It is unfortunate that progressives do not understand this. Progressives want real change and Trump impeached, but these desires are at variance with one another.
Few, if any, of the impeach Trump crowd are paying any attention to the fabricated case against Trump that has taken the place of the Russiagate fabrication that failed. They could not care less what the case is or whether it is a fabrication. Dislike of Trump suffices.
Nevertheless, let’s look at the fabricated case.
First of all, the alleged whistleblower is not a legitimate whistleblower. He is Eric Ciaramella, a CIA officer with a second-hand complaint who met with House Intelligence (sic) chairman Adam Schiff a month ahead to orchestrate the event. Ciaramella served on Obama’s staff when VP Joe Biden was point man for Ukraine. Ciaramella also worked with CIA Director John Brennan, the architect of “Russiagate,” and with a Democratic National Committee operative who encouraged Ukraine officials to come up with dirt on President Trump.
All of this and more has caused the “whistleblower” to withdraw from testifying.
Desperate for a substitute, Democrats have come up with tainted career bureaucrats who favor military aid to Ukraine and a hard line toward Russia. Bill Taylor a US diplomat in Ukraine claims that Trump’s ambassador to the European Union, Gordon Sondland, said that US military aid to Ukraine was conditional on Ukraine reopening the government’s investigation into the Ukrainian company, Burisma, an investigation that VP Joe Biden had closed down. Burisma is the company that paid as much as $1.75 million to Biden and his son.
Taylor claims that another bureaucrat, Tim Morrison, told him that Sondland communicated the “quid pro quo” to an aide to Zelensky.
Sondland rejects the claims by Taylor and Morrison.
A Ukrainian born rabid anti-Russian US Army officer serving on the National Security Council, Alexander Vindman, also offers two cents of unverified quid pro quo claims. Vindman’s motive seems to be that President Trump is inclined to follow a different policy toward Ukraine than Vindman prefers.
This is the extent of the case against Trump. Amazingly weak considering that Ukrainian president Zelensky has stated publicly that there was no quid pro quo and that the released transcript of the Trump-Zelensky conversation shows no quid pro quo.
Now for the issue of the alleged quid pro quo. It seems that everyone on both sides of the argument takes for granted without a second of thought that if there was a quid pro quo, there was an offense, possibly one sufficiently offensive to warrant impeachment. This is utter ignorant nonsense.
Quid pro quos are endemic in US foreign policy and always have been. The US government offered Ecuador president Lenin Moreno a $4.2 billion IMF loan in exchange for revoking Julian Assange’s asylum. Moreno took the deal.
Washington offered the Venezuelan military money to overthrow President Maduro. The military refused the offer.
Dozens of examples come readily to mind. Research would produce enough to fill a book.
What do you think the sanctions are that the US president places on countries? They are punishments that Washington imposes for not accepting Washington’s deal.
As for a quid pro quo deal between the US executive branch and president of Ukraine, we have VP Joe Biden’s boast that he got the Ukrainian prosecutor fired who was investigating corruption in the firm that had purchased US protection by putting Biden’s son, Hunter, on Burisma’s board. Joe Biden brags in front of the Council on Foreign Relations that he gave the Ukrainian president 6 hours to fire the prosecutor or forfeit $1 billion in US aid.
As Biden was US Vice President at the time and is currently the leading Democratic candidate for the US presidential nomination, he is clearly guilty of what Trump is accused. Why is only Trump subject to investigation? If an offense that is merely suspected or alleged suffices for impeaching a president, why isn’t a known and admitted and bragged about offense reason to disqualify Biden from being president?
One would think that a question this obvious would be the topic of debate. But not a word from the presstitutes, Democrats, or Republicans.
Finally, there is the question of the whistleblower law. If this interpretation sent to me by a reliable source is correct, there is no basis in law for the alleged whistleblower complaint.
Tyler Durden
Fri, 11/08/2019 – 19:45 - "Clients With Guns" Are Demanding Deposits From Crisis-Stricken Lebanese Banks
"Clients With Guns" Are Demanding Deposits From Crisis-Stricken Lebanese Banks
Here we go as predicted: the Lebanese central bank attempts to prevent a “panic mode” scramble on the part of the public to remove all deposits, and the recently imposed (unofficial) regulations geared toward staving off capital flight are predictably failing fast, per Reuters:
“Clients with guns have entered banks and security guards have been afraid to speak to them as when people are in a state like this you don’t know how people will act.”
People queue outside a bank in Sidon, Lebanon the prior Friday, Nov. 1 via Reuters/Daily Sabah Lebanon’s private banks reopened a week ago on Friday following a two-week closure due to massive anti-government protests which created gridlock across the country’s main cities, including closure of other public institutions such as schools.
The Nov. 1 bank re-openings followed Prime Minister Saad Hariri’s resignation last week, which the some one million demonstrators flooding Lebanon’s streets since early last month have touted as a ‘success’; however, the economy remains on the brink of collapse, given growing fears of a major run on the banks.
Since reopening banks have blocked most transfers abroad and maintained tight controls over hard-currency withdrawals, policies which have led to reports of threats against bank staff. Some of these heated encounters are being filmed and posted to the internet. Likely the situation is about to become explosive into next week after the banks close for the weekend.
“This is our money!… We can’t get our money – you have money in the banks and you’re not giving it to the people! You’re stealing from us!” (our translation) the man in the below video shouts inside his bank.
Situation in Lebanese Banks is extremely dangerous, shortage to lack of US dollars for depositors. https://t.co/MrCicTg4yF
— Bassem (@BBassem7) November 8, 2019
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Chaotic scenes played out from the moment the banks reopened, as Lebanon’s Daily Sabah described:
Large queues starting forming outside banks from early morning and people rushed in as soon as doors opened to cash in their salaries and make transfers.
Tellers struggled to handle the flood of customers trying to cram inside bank branches, as queues spilt onto the streets.
And now with the situation getting increasingly dangerous, the crisis could be compounded given bank staff are pondering a strike amid the broader protests still underway, and which have been raging for over the past month:
Bank staff are considering going on strike, he said.
“Clients are becoming very aggressive; the situation is very critical and our colleagues cannot continue under the current circumstances,” added Hajj, whose union has around 11,000 members, just under half of the total banking staff.
“Anything that touches the liquidity of the bank is being restricted,” one Lebanese banker told Reuters.
bank friday#يسقط_حكم_المصرف pic.twitter.com/keeHmg0Q2I
— Ali Reslan (@Ali___lb) November 1, 2019
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Fights and riots have been reported both inside and outside commercial banks. Tellers and managers have reported being assaulted as exasperated customers demand their money:
مدير bank od beirut يعتدي على المودع #لبنان_ينتقض ريمون خوري pic.twitter.com/TCtxdMJrOu
— nadine (@nadineabdulwah) November 8, 2019
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The World Bank weighed in on Friday, urging leaders in Beirut to form new Cabinet within a week, citing risks to Lebanon’s stability as “deeply concerning,” according to the AP.
Given the country’s high unemployment and extreme lack of confidence in the Lebanese Lira, citizens are understandably enraged at not accessing their dollars, and are apparently now taking matters into their own hands:
Some banks have lowered the cap on maximum withdrawals from dollar accounts this week, according to customers and bank employees. At least one bank cut credit card limits from $10,000 to $1,000 this week, customers said.
…One bank told a customer that a weekly withdrawal cap of $2,500 had been slashed to $1,500.
Vandalized ATM machine in Lebanon’s northern port city of Tripoli this week, via Middle East Online. The massive anti-government protests, focused in large part on rooting out endemic corruption, comes after Lebanon has in recent years suffered a severe slowdown in capital flows, and difficulty of importers securing dollars at the pegged exchange rate, as well as periodic collapse of public services – due to frequent strikes, work stoppages, and lack of public funding.
The tiny Middle East country currently has a crippling debt of $86 billion – roughly 150% of the gross domestic product – and some 80% of that debt is believed owed either to the central bank or to Lebanese commercial banks.
Tyler Durden
Fri, 11/08/2019 – 19:32 - Bloomberg Officially Files Paperwork For 2020 Presidential Primary
Bloomberg Officially Files Paperwork For 2020 Presidential Primary
As was first reported yesterday, late on Friday former New York City Mayor Michael Bloomberg officially filed as a candidate for the Alabama Democratic presidential primary, entering a White House run that is sure to shake up the already-crowded 2020 field.
At 4:35pm, the Alabama Democratic Party updated its website to indicate that Bloomberg had filed the necessary documents ahead of the state’s registration deadline on Friday. The southern state has the earliest deadline in the country, Nov. 8, for candidates to qualify for the primary ballot, forcing Mr. Bloomberg to put his name into contention this week if he did not want to get shut out of the ballot.
Bloomberg said in March that he would not run for president but warned that the ultimate Democratic nominee should not take progressive policy positions that would “drag the party to an extreme that would diminish our chances in the general election.” Yet as the Hill notes, speculation had swirled that Bloomberg was reconsidering his decision especially after Joe Biden started trailing Liz Warren badly in the polls, and was behind Bernie Sanders in fundraising.
With his late entry and a personal fortune of $53.4 billion according to Forbes, Bloomberg could jolt the Democratic primary race, hurting the chances of other centrist candidates such as Joe Biden and Pete Buttigieg. While Bloomberg has not made a final decision to run, his allies say he intends to enter the race and his early moves have rippled through the rest of the Democratic field.
Predictably, Bloomberg’s decision has raised alarm among supporters of former VP Joseph R. Biden who is presently the leading centrist in the race, and prompted accusations from Senators Elizabeth Warren and Bernie Sanders that Bloomberg is going to try to buy the presidency.
The former mayor would also enter the race as the top target for progressives such as Elizabeth Warren and Bernie Sanders, two outspoken, progressive liberals who have argued the rich hold too much sway in U.S. politics and have unveiled a litany of plans hinged on raising taxes on the wealthiest Americans.
“The wealthy and well connected are scared,” Warren’s campaign said in an email to supporters as news broke that Bloomberg was considering a run. “They’re scared that under a Warren presidency, they would no longer have a government that caters to their every need. So they’re doing whatever they can to try to stop Elizabeth and our movement from winning in 2020 and bringing big, structural change in 2021.”
In perhaps the strongest sign yet that his candidacy would scramble the existing race, the NYT reports that Bloomberg has decided that if he seeks the Democratic nomination, he would stake his candidacy on big, delegate-rich states like California and Texas, which vote somewhat later in the calendar, rather than trying to catch up with his rivals in the circuit of traditional early states.
“We now need to finish the job and ensure that Trump is defeated — but Mike is increasingly concerned that the current field of candidates is not well positioned to do that,” Howard Wolfson, a close adviser to Bloomberg, tweeted on Thursday. He added that “based on his record of accomplishment, leadership and his ability to bring people together to drive change, Mike would be able to take the fight to Trump and win.”
If Bloomberg proceeds with such a campaign, he would be attempting to take a high-risk route to the Democratic nomination unprecedented in modern presidential politics — one that shuns the town hall meetings and door-to-door campaigning that characterizes states like Iowa and New Hampshire, and relies instead on a sustained and costly campaign of paid advertising and canvassing on a grand scale.
In short, he would try to buy the presidency, and he won’t even have to promise every American a Bloomberg terminal.
Such an approach would amount to a bet that no other candidate emerges from that early-state circuit with the kind of momentum that could overwhelm whatever operation Bloomberg has built in the Super Tuesday states that vote in early March. It would also likely enrage Democratic Party leaders in the early states, several of which are key battlegrounds in the general election, and intensify complaints from Bloomberg’s opponents about his reliance on personal wealth.
Still, it may be just what centrist Democrats want: Bloomberg will enter the race looking to become the candidate for swaths of Democratic voters who fear that progressive policies will prove too liberal in key swing states that President Trump won in 2016.
A New York Times/Siena College poll released Friday found that a majority of Democrats surveyed in six battleground states — Arizona, Florida, Michigan, North Carolina, Pennsylvania and Wisconsin — prefer a more centrist-minded candidate who promises to find common ground with Republicans.
And yet despite virtually unlimited funds, and having a firm lane in which to run, Bloomberg’s path to the 2020 nomination will be far from easy.
Bloomberg’s potential bid drew immediate criticism that he was just another wealthy businessman trying to buy an election.
Bloomberg will face questions about his record as a three-term mayor of New York, particularly from the Democratic Party’s vocal progressive wing, and about why he is needed in a race that still has 17 candidates vying to challenge Republican President Donald Trump in November 2020.
“There is no constituency for Michael Bloomberg that isn’t already taken by one of the candidates who are already running,” said Charles Chamberlain, chair of the Vermont-based progressive group Democracy for America.
He will also face criticism for New York’s implementation of “stop and frisk,” a policy that allowed police to stop and search people on the street that was decried as racist for overwhelmingly targeting black men. African-American voters are a critical Democratic voting bloc. Bloomberg has also been panned for attempting to ban sodas sold in cups larger than 16 ounces, a proposal that drew national criticism for supporting a “nanny state” that was ultimately struck down by New York courts.
But Bloomberg is skeptical that any of the current candidates can beat Trump, according to a spokesman. It also suggests that Bloomberg is skeptical the attempt to impeach Trump will prove successful.
Which is why Bloomberg’s entry into the race may have been the best news Trump has received in recent months.
Meanwhile, opinion polls show three contenders battling at the top of the Democratic race: U.S. Senators Elizabeth Warren of Massachusetts and Bernie Sanders of Vermont, who lead the progressive wing, and moderate Joe Biden, the former vice president. On online betting websites, Bloomberg is also trailing, and after an initial burst on Thursday, he has stabilized in 5th place, just after Bernie Sanders.
Bloomberg has been critical of Warren and her desire to institute a tax on the super-wealthy, which she would use to fund programs ranging from universal healthcare to free college tuition. Biden, meanwhile, has turned in uneven debate performances and lagged behind his top rivals in fundraising. Bloomberg would likely seek to appeal to the same moderate voters drawn to Biden.
“It’s almost like he’s running because this billionaire wants to stop Elizabeth Warren,” Brad Bannon, a Democratic strategist who advises progressive groups and labor unions, said of Bloomberg. “It’s lousy for Joe Biden but great for Elizabeth Warren.”
And Donald Trump, of course.
Public opinion polls show most Democrats do not share Bloomberg’s dissatisfaction with the contenders. A Monmouth University poll taken in late October and early November found three-fourths of Democrats were satisfied with their choice of candidates and just 16% wanted someone else.
Then there is his age: Bloomberg, the CEO and founder of Bloomberg LP, would be the second-oldest candidate among the Democrats in a race where age has been an issue. Sanders, who took time off the campaign trail after a heart attack, is 78. Biden is 76, and Warren is 70. Trump is 73.
Bloomberg also will face questions about his decision to run for New York mayor in 2001 as a Republican. He switched to independent before he ran for a third term in 2009. In 2018, while weighing whether to run for president, he switched his party registration again and became a Democrat.
After leaving office, he emerged as one of the strongest supporters of gun-control measures, pouring millions of dollars into advocacy groups that push for measures to ban the sale of some guns and make it harder to purchase others.
And while he is a staunch environmentalist, Bloomberg is a helicopter-flying fanatic who also owns several private jets. In October 2004, officials with the Meadowlands Sports Complex denied Mr. Bloomberg’s request to fly his helicopter to a Jets game and encouraged him to take the bus from the Port Authority Bus Terminal. In January 2002, when he was criticized for taking the controls of a police helicopter to attend Adolfo Carrión Jr.’s inauguration as borough president in the Bronx, he defended himself, saying, “I fly helicopters more sophisticated than that all the time that I happen to own.”
Of course, having enough money to buy his own polling company, Bloomberg is aware of all these shortcomings and yet he still appears eager to run.
Bloomberg is seen as considering skipping the early primary and caucus states of Iowa, New Hampshire, Nevada or South Carolina, to focus instead on Super Tuesday as he builds out his campaign infrastructure. However, Democrats in those states still hope to hear from Bloomberg.
New Hampshire Democratic Party Chairman Ray Buckley and Iowa Democratic Party Chairman Troy Price issued a rare joint statement on Friday pushing Bloomberg to visit their states if he mounts a presidential bid.
“We are excited that this Democratic presidential nomination contest has so many qualified candidates who all have plans to grow our economy, make quality health care more accessible, and make college more affordable, and we are certain that Granite Staters, Iowans, and other early state voters are eager to ask Michael Bloomberg about his plans to move our states and our country forward,” Buckley and Price said. “We hope that they will have that opportunity.”
“It’s going to be difficult, but we’ve never really seen a candidate with this amount of resources at his disposal. That could perhaps make up for a lot of groundwork and a lot of time here,” said veteran Iowa Democratic operative Grant Woodard, an aide to Hillary Clinton in 2008.
“A lot of people here haven’t made up their minds,” he added. “There could still be an opening for him.”
Who knows, perhaps in this age of billionaires, the US presidency really does end up going to the highest bidder.
Come November 2020, will those photo showcase three US presidents?
Tyler Durden
Fri, 11/08/2019 – 19:28 - Harvard Wants Students To Bone Up On Oral And Anal Sex, Stop Judging Fatties
Harvard Wants Students To Bone Up On Oral And Anal Sex, Stop Judging Fatties
Authored by Brittany Slaughter via The College Fix blog,
Annual, student-led Sex Week tradition returns to Ivy League institution
“Anal Sex 101,” “Oral Sex 101” and “fatphobia” workshop are among 13 different offerings students at Harvard University have the option of attending as part of its annual Sex Week.
Harvard Sex Week launched Nov. 4 and runs through Nov. 10.
The workshops are organized by the student organization Sexual Health Education and Advocacy Throughout Harvard. Its members did not respond to repeated requests for comment. A Harvard spokesperson also declined comment.
Since 2012, SHEATH has hosted Harvard Sex Week every fall, according to its website.
“Sex Week intends to both educate and advocate, providing a platform for self-exploration and community dialogue,” it states. “We intend to promote a week of programming that is interdisciplinary, thought-provoking, scholastic, innovative, and applicable to student experiences in order to promote a more holistic understanding of sex and sexuality.”
This year, Sex Week kicked off with “Sticky: A (Self) Love Story” and “Feel Those Good Vibrations: Sex Toys 101.” On Tuesday students were offered a sex education class as well as “What What in the Butt?: Anal Sex 101.”
On Wednesday a “Tantric Sex 101” workshop was followed by a panel on racial preferences and dating. Thursday brought an STD panel and reproductive justice workshop to campus.
On today’s docket are panels on BGLTQ and intimacy. This weekend will offer “Body Positivity: Fatphobia and Liberation,” “Getting A-Head in Life: Oral Sex 101” and a “sexy trivia” game, according to the schedule.
Throughout the week, student organizers dole out various free sex toy swag to attendees, as the week is sponsored by 20 different companies involved in the sex-pleasure industry. Online, the companies sell various products, such as vibrators, anal plugs, specialized condoms, testicle stretchers, strap ons, ankle restraints and other items.
On-campus sponsors include Queer Students and Allies, Harvard College Women’s Center, Office of BGLTQ Student Life, Office of Sexual Assault Prevention and Response, Harvard College Reproductive Justice Action and several other campus groups.
While organizers of Sex Week do not appear interested in discussing their programming, The College Fix reached out to renown author and cultural critic Mary Eberstadt to weigh in.
Eberstadt is author of the recently published book Primal Screams: How the Sexual Revolution Created Identity Politics.
“Harvard Sex Week is corporate exploitation at its sleaziest. Students should be protesting this cynical attempt to pick their pockets and degrade their romances — not lining up for instruction about practices that will land some in the emergency clinic,” she said in an email to The College Fix.
“It’s especially ironic that Sex Week gets Harvard’s imprimatur even as some of the men of #MeToo are appearing in courts. Sex Week promotes the same deformed view of the human person that led such men to harassment and assault in the first place: one dominated by pornographic narratives according to which human beings are always and everywhere available for any sexual permutation, no matter how problematic to their psyches or inimical to their health,” she said.
“It’s past time for these travesties to be shut down — and for the corporate sponsors of this toxic worldview to be ostracized like any other companies promoting public harm.”
Tyler Durden
Fri, 11/08/2019 – 19:05 - Brazil's Leftist Icon Lula Freed From Federal Prison After Supreme Court Ruling
Brazil's Leftist Icon Lula Freed From Federal Prison After Supreme Court Ruling
Former Brazilian President Luiz Inácio Lula da Silva, known as Lula, was ordered released from prison on Friday, after the Supreme Court ruled on Thursday to end mandatory imprisonment for convicts who lose their first appeal.
Lula, a celebrated leftist icon in Latin America, was freed after a year-and-a-half behind bars due to what his supporters say was a “politically motivated” prosecution from the right-wing government.
He had been sentenced to a total of eight years and 10 months after being convicted of taking bribes from engineering firms as part of the sweeping anti-corruption “Car Wash” investigation.
Via Lula.com.br/Ricardo Stuckert At the time police said they had evidence he benefited from a kick-back scheme at state oil firm Petroleo Brasileiro SA (Petrobras), receiving payments and luxury real estate. A police statement had alleged, “Ex-president Lula, besides being party leader, was the one ultimately responsible for the decision on who would be the directors at Petrobras and was one of the main beneficiaries of these crimes.”
Lula walked out of federal police headquarters in the southern city of Curitiba after the shock announcement of his release Friday to cheers from a large crowd of supporters, who were mostly wearing and carrying signs in the characteristic Workers’ Party red.
“You don’t know how much you represent me,” the former Brazilian president told the jubilant crowd.
You know who is really pissed right now? Jair Bolsonaro. Sergio Moro. Deltan Dallagnol. pic.twitter.com/YAfILr90Mg
— Andrew Fishman (@AndrewDFish) November 8, 2019
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Supporters claim as evidence that Lula was “set up” the fact that the very former federal judge who spearheaded the Car Wash investigations which convicted Lula has quickly advanced in Bolsonaro’s administration, as Reuters observes:
Lula and his supporters have also criticized the fact that Sergio Moro, a former federal judge who oversaw the Car Wash probe and convicted Lula, accepted an invitation to become the justice minister of far-right President Jair Bolsonaro, a longtime foe of Lula and key rival in last year’s election.
Journalist Glenn Greenwald, who lives in Brazil, tweeted, “An extraordinary day in Brazil – for the world, given Lula’s stature.”
“Eu saio com muita vontade de voltar a lutar” pic.twitter.com/7FpiXvjAWl
— Lula (@LulaOficial) November 8, 2019
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In his remarks upon emerging from federal prison, Lula further addressed the crowd of supporters saying, “They did not imprison a man.” And added, “They wanted to kill an idea. And ideas are not killed.”
* * *
Meanwhile, look who else was ecstatic over the news. “Truth Triumphed in Brazil!” Maduro tweeted as congratulations.
¡La Verdad Triunfó en Brasil! En nombre del pueblo de Venezuela, expreso mi más profunda alegría por la liberación de mi hermano y amigo @LulaOficial, quien nuevamente estará en las calles para liderar las causas justas de los brasileños y brasileñas. ¡Viva #LulaLibre! pic.twitter.com/q5GTbbwWIb
— Nicolás Maduro (@NicolasMaduro) November 8, 2019
Tyler Durden
Fri, 11/08/2019 – 18:45 - Pat Buchanan: "Will 'Sexist' White Males Derail Warren?"
Pat Buchanan: "Will 'Sexist' White Males Derail Warren?"
Authored by Patrick Buchanan via Buchanan.org,
After celebrating Tuesday’s takeover of Virginia’s legislature and the Kentucky governorship, the liberal establishment appears poised to crush its biggest threat: the surging candidacy of Elizabeth Warren.
From the tempo and tenor of the attacks, establishment fears of Warren’s success are real — and understandably so.
Two Wednesday polls show Warren running even with Joe Biden nationally. And a new Iowa poll shows Warren in front of the field with 20%, and Biden falling into fourth place with 15%.
[ZH: The money bets tell a different story however]
Source: Bloomberg
The danger for Democrats: While Warren is now the party’s front-runner, they fear she’s a sure loser to Donald Trump in 2020.
And, again, with reason. A recent poll of six battleground states, including Pennsylvania, Florida and Michigan, showed Trump beating or tying Warren in all of them except for Arizona.
Nightmare scenario: Warren wins the nomination, but when her neo-Marxist agenda is exposed, Middle America recoils in horror.
The economic elite is already sounding the alarm.
Jamie Dimon of JP Morgan Chase says Warren “vilifies successful people.” Microsoft founder Bill Gates says her proposals would imperil “innovation” and “capital formation.”
Writing in The New York Times, Obama adviser Steven Rattner describes a Warren presidency as “a terrifying prospect.”
Warren would “extend the reach and weight of the federal government far further into the economy than anything even Franklin Roosevelt dreamed of (and) … turn America’s uniquely successful public-private relationship into a dirigiste European-style system.”
“If you want to live in France” — where half the GDP is controlled by the regime — says Rattner, “Warren should be your candidate.”
What finally shocked anti-Warren liberals into action was her recent revelation of how she intends to pay for her “Medicare for all” plan.
Warren’s plan would require at least $23 trillion more in federal spending over a decade. Other experts say the added costs could run to $32 trillion, raising the U.S. government’s share of the GDP by one-half and abolishing the private health insurance plans of 156 million Americans.
“Many of America’s global champions, like banks and tech giants, would be dismembered,” writes Rattner, “Shale fracking would be banned, which would send oil and natural gas prices soaring and cost millions of Americans their jobs.”
Beyond “Medicare for All,” Warren has other plans. Universal child care and free schooling from pre-kindergarten through college and the cancelation of student loans, plus a new look at reparations for slavery.
How would President Warren pay for all her “plans”?
She would raise the corporate rate to 35% from 21%, and slam a 40% tax on the profits of companies that try to flee the country.
She would raise the capital gains tax, impose new estate taxes, raise Social Security taxes on folks with higher incomes, and confiscate 2% of the wealth of those with $50 million in assets and 3% of the wealth of those with $1 billion, every year.
Writes Politifact:
“All told, we counted $7 trillion in new spending over a 10-year period, and that’s without Medicare for All. On the flip side, Warren offered specific tax proposals that came to $4.55 trillion.”
Still, Warren’s socialism is not what her main rivals, all white men, are zeroing in on. They’ve decided to play hardball.
Thursday, under a headline, “Warren Faces Accusations that She’s ‘Angry,’ Which Supporters Say is Sexist,” The Washington Post reported:
“Two of the leading male candidates in the Democratic presidential primary race — Joe Biden and Pete Buttigieg — have escalated separate lines of attack as they attempt to counter the field’s most prominent woman: Sen. Elizabeth Warren (D-Mass.) is antagonistic and angry.”
Warren has a “my way or the highway” approach, said Buttigieg, she is “so absorbed in the fighting that it is as though fighting were the purpose.”
Biden says Warren, who has a real shot at taking the nomination, reflects “an angry unyielding viewpoint that has crept into our politics.”
This is “treacherous,” warns the Post, “given that many Democrats remain upset over what they view as the sexist treatment of Hillary Clinton, the party’s last nominee.”
The Democratic Party today defines itself as an inclusive party of women, gays, Hispanics, African Americans and other people of color.
Yet three months out from the decisive early contests of Iowa, New Hampshire, Nevada and South Carolina, the party is going into the semifinals of its contest for a leader and future president without a single person of color in the final four.
Moreover, the three white males are denigrating and piling on the woman who is the front-runner with attacks on her personality for which conservatives, if they used such tactics, would be charged with “dog-whistling” the white working class.
When one looks at the approval-disapproval rating of the president, re-election appears problematic. When one looks at the Democrats’ agenda and field of candidates, the odds of Trump’s re-election seem a good deal better.
This thing is by no means over.
Tyler Durden
Fri, 11/08/2019 – 18:25 - Moodys Downgrades UK Outlook To Negative On "Brexit Paralysis"
Moodys Downgrades UK Outlook To Negative On "Brexit Paralysis"
Moody’s downgraded its outlook on Britain’s debt (currently rated Aa2) to negative from stable after the market close on Friday, saying Brexit had been a catalyst for an erosion in the country’s institutional strength, perceived “material deterioration” in UK governance, and that the country’s ability to set policy has weakened in the Brexit era along with its commitment to fiscal discipline.
The outlook cut represents a catch down to its competitors: the UK is currently rated AA by S&P and AA- at Fitch Ratings, with both companies having the UK on negative watch.
“It would be optimistic to assume that the previously cohesive, predictable approach to legislation and policymaking in the UK will return once Brexit is no longer a contentious issue, however that is achieved,” the ratings agency said adding that “the increasing inertia and, at times, paralysis that has characterized the Brexit-era policymaking process has illustrated how the capability and predictability that has traditionally distinguished the U.K.’s institutional framework has diminished.”
“The decline in institutional strength appears to Moody’s to be structural in nature and likely to survive Brexit given the deep divisions within society and the country’s political landscape,” Moody’s added.
The decision to put the UK on negative outlook even as Moody’s affirmed Britain’s Aa2 long-term issuer and senior unsecured ratings comes one month before an election that is likely to determine the future of Brexit. While the election will have a big impact on Brexit, this week has seen both sides escalate their spending pledges, drawing election battle lines with plans to end a decade of U.K. austerity.
As Bloomberg observes, there hasn’t been a U.K. downgrade by a major rating company since September 2017, when Moody’s downgraded the UK to Aa2, the country’s lowest ever rating .
Upon the announcement, the pound dipped 10 pips from 1.2784 to 1.2774.
The full Moody’s statement is below:
Moody’s changes outlook on UK’s rating to negative from stable, affirms Aa2 rating
Paris, November 08, 2019 — Moody’s Investors Service (“Moody’s”) has today changed the outlook on the Government of the United Kingdom’s Aa2 ratings to negative from stable. Concurrently, Moody’s has affirmed the Aa2 long-term issuer and senior unsecured ratings.
The outlook on the Bank of England’s Aa2 issuer and senior unsecured bond ratings and the (P)Aa2 on its senior unsecured MTN programme has also changed to negative from stable; the Aa2 and (P)Aa2 ratings have been affirmed. The short-term issuer ratings have been affirmed at Prime-1.
The change in outlook to negative from stable is driven by two factors:
1. UK institutions have weakened as they have struggled to cope with the magnitude of policy challenges that they currently face, including those that relate to fiscal policy.
2. The UK’s economic and fiscal strength are likely to be weaker going forward and more susceptible to shocks than previously assumed.
The affirmation of the UK’s Aa2 sovereign ratings balances the credit-supportive factors such as wealth, economic diversification, a sound monetary policy framework and a highly flexible labour market against constraints such as a high debt burden and weak productivity growth.
The foreign and local currency bond ceilings and the local-currency deposit ceiling remain unchanged at Aaa. The foreign-currency long-term deposit ceiling remains Aa2, and the short-term foreign-currency bond and bank deposit country ceilings remain at P-1.
RATINGS RATIONALE
RATIONALE FOR NEGATIVE OUTLOOK
FIRST DRIVER: UK INSTITUTIONAL CAPACITY AND COMMITMENT TO FISCAL DISCIPLINE HAVE WEAKENED
The increasing inertia and, at times, paralysis that has characterized the Brexit-era policymaking process has illustrated how the capability and predictability that has traditionally distinguished the UK’s institutional framework has diminished. Events in the House of Commons in recent months have revealed legislators, policymakers and administrators to be unable to arrive at the consensus needed to achieve either a broadly acceptable approach to Brexit, or the continuation of policy in other important areas, for example to address challenges relating to education, productivity, or investment in infrastructure.
Brexit has been the catalyst for this erosion in institutional strength, which can also be seen in, among other things, the small but significant weakening of Worldwide Governance Indicators for Government Effectiveness and Rule of Law. It is likely to remain so for some time to come given the inevitably contentious nature of the negotiations regarding a permanent set of trading arrangements with the EU. And it would be optimistic to assume that the previously cohesive, predictable approach to legislation and policymaking in the UK will return once Brexit is no longer a contentious issue, however that is achieved. The decline in institutional strength appears to Moody’s to be structural in nature and likely to survive Brexit given the deep divisions within society and the country’s political landscape.
This broad erosion in the predictability and cohesion of policymaking is mirrored in areas of policy that are significant from a credit perspective. Most importantly, the UK’s broad fiscal framework, characterized by features such as multi-year budget plans and more detailed revenue and spending decisions announced for the outer years of the planning period, has weakened. Following the significant fiscal consolidation that took place between 2010 and 2015, more recent years have seen an increasing willingness to move the goalposts, with changes to the longer-term fiscal anchor and the definition of fiscal targets and a revealed preference to shift the fiscal tightening to outer years of a five-year horizon. Successive governments have announced large, permanent increases in public expenditures, most notably a large increase in spending on the National Health Service (NHS), outside the normal calendar for fiscal policy changes and without detailed policy plans.
Over the longer term, institutional weakening may also impact the UK’s economic strength, through its effect on the investment climate and on the UK’s attractiveness to skilled and unskilled foreign labour. In recent years, we have already seen the negative impact this can have, and Moody’s expects this negative influence will likely endure as the exit process continues and uncertainties persist during the subsequent phase of trade negotiations with the EU and with other nations.
This deterioration in the quality of institutions has made policy planning more opaque and unpredictable. The independent Office for Budget Responsibility (OBR) has noted that policy risks to the public finances are now significant and are greater than they were two years ago. Going forward, no matter what the outcome is of the general election Moody’s sees widespread political pressures for higher expenditures with no clear plan to increase revenues to finance this spending. In Moody’s view, the commitment to maintaining a predictable, prudent fiscal framework and associated policy settings that has characterized the UK’s credit profile until now is weakening in a way that will transcend electoral cycles as pressures from the electorate for improved public services continue to rise.SECOND DRIVER: A LIKELY DETERIORATION IN FISCAL AND ECONOMIC STRENGTH
The weakening of the fiscal policy environment is evident in the data. Even after years of fiscal consolidation, the country remains highly indebted, with gross general government debt being only marginally below its 2015 peak of 86.9% of GDP, and unlikely to fall significantly over the medium term. In Moody’s baseline projections, the UK’s general government debt is set to stay broadly unchanged at around 85% of GDP over the next 3-4 years, absent any unexpected economic shocks. While that is a lower level than assumed when Moody’s downgraded the UK’s rating to Aa2 in September 2017, the trajectory has changed. Then, Moody’s expected a gradual decline in the debt burden over the longer term. Now, Moody’s sees little appetite or opportunity for that to happen.
Indeed, the risks are that debt will begin to rise. In the current political climate, Moody’s sees no meaningful pressure for debt-reducing fiscal policies. In fact, there is rising pressure for spending increases with little apparent clarity as yet on how they might be financed through additional revenues and little scope for politically acceptable expenditure cuts. While greater public investment could be growth-enhancing, there is no appetite to address important areas of rigidity in public expenditure, particularly health and social care, which will be key sources of future financial pressure. In June 2018, the government pledged real annual increases on average of 3.4% for the NHS for the next five years. Even that expenditure increase may not be sufficient to achieve the longer-term objective of improving standards. In recent years, the government has consistently had to accommodate higher spending by the NHS, and the OBR projects that health spending will nearly double as a proportion of GDP over the coming decades.
The large and sticky debt burden is a key source of fragility for the UK’s credit profile, particularly at the current juncture, when external threats to growth are rising and internal growth momentum is slowing.
The magnitude of the fiscal challenge may well be amplified by weaker-than-expected growth. Since the EU referendum, UK business investment (which accounts for more than half of gross fixed capital formation) has contracted by more than 1% in real terms, in contrast to the growth that Moody’s has observed in other advanced economies. This shortfall does not just affect current growth rates. The persistent weakness of business investment, combined with firms’ bias towards hiring as a more flexible way to increase capacity, has resulted in limited capital deepening–a trend that will further intensify the UK’s existing productivity challenges over the longer term. The UK economy has already experienced low productivity growth since the global financial crisis, compared to previous cycles and also other advanced economies.
This weakness in investment has taken place despite broadly favourable credit conditions and limited spare capacity. It is unlikely to reverse quickly; Brexit-related uncertainty as to future policy settings and the UK’s relationship with trading partners is unlikely to diminish much even in the event that a deal is struck, given the significant challenges it is now clear will be inherent in agreeing any sort of longer-term trade agreement with the EU. Even if the UK leaves the EU under the terms of a revised Withdrawal Agreement, the two sides will still have to go through difficult and lengthy negotiations around the terms of their future relationship. Negotiations with other key trading partners are unlikely to be any more straightforward.
These trends leave the UK more vulnerable to shocks, and the debt burden is sensitive to both growth and fiscal shocks. A deterioration in growth and the fiscal performance as well as a rise in interest rates or inflation would cause the debt burden to rise not fall. In Moody’s view, adverse fiscal outcomes would have the most impact, followed by a reduction in growth.
RATIONALE FOR AFFIRMATION OF Aa2 RATINGS
The factors supporting the affirmation of the UK’s Aa2 sovereign rating include economy’s significant strength, which is a function of its large size, diversification, and flexibility. The government also enjoys very low financing risks and a very high average debt maturity. While the UK’s institutions have weakened, in part due to the serious challenges raised by Brexit, they remain strong in comparison to global peers and the monetary policy framework and central banking arrangements continue to be excellent.
ENVIRONMENTAL, SOCIAL, GOVERNANCE CONSIDERATIONS
Moody’s takes account of the impact of environmental (E), social (S), and governance (G) factors when assessing sovereign issuers’ economic, institutional and fiscal strength and their susceptibility to event risk. In the case of the UK, the materiality of ESG to the credit profile is as follows.
Environmental considerations are not currently material to the rating.
Social factors are taken into account in determining the UK’s credit profile. The most relevant social factors relate to spending pressures on healthcare and pensions due to an ageing population. Over the longer term, demographic pressures will (as in many peers) negatively influence potential growth in the absence of increases in productivity, in participation rates or in immigration.
Governance factors are a material driver of the rating. On a global basis, the UK’s governance institutions are strong, supporting the Aa2 rating for now. However, the deterioration observed in recent years is a key driver for the negative outlook.
WHAT COULD CHANGE THE RATING UP/DOWN
The UK’s rating would likely be downgraded if we were to conclude that policymakers’ capacity and appetite to develop a credible medium-term debt-reduction strategy was low. This would be particularly negative for the UK’s credit quality if, in our view, that reflected a continued overall erosion in the coherence and predictability of UK policymaking. Structurally weaker economic fundamentals would also undermine the UK’s credit profile. In that context, departure from the EU without a deal would be strongly negative for the rating. However, even if some form of withdrawal agreement were to be signed, indications that the UK would not be able to replace the very favourable trading arrangements embedded in EU membership with similarly advantageous agreements with key trading partners in Europe and elsewhere would also be negative for the rating.
Given the negative outlook on the UK’s rating, an upgrade is unlikely in the short to medium term. However, indications that the apparent erosion in institutional strength is in fact reversible and that the coming years will see a reversion to the capability and predictability that has traditionally characterized the UK’s institutional framework would support the rating at its current level. Such an outcome would most likely be characterised by the development of a credible strategy to achieve medium-term fiscal objectives that put the debt burden on a downward trajectory. Passage of economic policies that could sustainably boost growth potential would also be credit positive.
Tyler Durden
Fri, 11/08/2019 – 18:09
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