- Is ISIS Simply A "Saudi Army In Disguise"?
Authored by F. William Engdahl via New Eastern Outlook,
In recent weeks one nation after another is falling over themselves, literally, to join the turkey shoot known, erroneously, as the war in Syria, ostensibly against the Islamic State or Daesh. The most wanted but most feared question is where will this war frenzy lead, and how can it be stopped short of dragging the entire planet into a world war of destruction?
On September 30, responding to a formal invitation or plea from the duly-elected President of the Syrian Arab Republic, the Russian Federation began what was an initially highly effective bombing campaign in support of the Syrian Government Army.
On 13 November following the terror attacks claimed by ISIS in Paris, the French President proclaimed France was “at war” and immediately sent her one and only aircraft carrier, the Charles de Gaulle, to Syria to join the battle. Then on December 4, the German Parliament approved sending 1,200 German soldiers and six Tornado jets to “help” France. Reports out of Germany say the Germans will not work with Russia or the Assad regime, but with CentCom command in Florida and coalition headquarters, not in Damascus, but in Kuwait. The same week the UK Parliament approved sending British planes and forces to “fight ISIS” in Syria. Again we can be sure it’s not to help Russia’s cause in cooperation with the Syrian Army of Assad to restore sovereignty to Syria.
Then Turkey’s hot-head President Recep Erdo?an, fresh from his criminal, premeditated downing of the Russian SU-24 in Syria, orders Turkish tanks into the oil-rich Mosul region of Iraq against the vehement protests of the Iraqi government. And added to this chaos, the United States claims that its planes have been surgically bombing ISIS sites for more than a year, yet the result has been only to expand the territories controlled by ISIS and other terror groups.
If we take a minute to step back and reflect, we can readily realize the world is literally going berzerk, with Syria as merely the ignition to a far uglier situation which has the potential to destroy our lovely, peaceful planet.
Something major missing
In recent weeks I have been increasingly unsatisfied by the general explanations about who is actually pulling the strings in the entire Middle East plot or, more precisely, plots, to the point of reexamining my earlier views on the role of Saudi Arabia. Since the June, 2015 surprise meeting in St Petersburg between Russian President Putin and Saudi Defense Minister Prince Salman, the Saudi monarchy gave a carefully cultivated impression of rapprochement with former arch-enemy Russia, even discussing purchase of up to $10 billion in Russian military equipment and nuclear plants, and possible “face time” for Putin with the Saudi King Salman.
The long procession of Arab leaders going to Moscow and Sochi in recent months to meet President Putin gave the impression of a modern version of the walk to Canossa in1077 of Holy Roman Emperor Henry IV to Pope Gregory VII at Canossa Castle, to beg revocation of Henry’s ex-communication. This time it looked like it was the Gulf Arab monarchs in the role of Henry IV, and Vladimir Putin in the role of the Pope. Or so it seemed. I at least believed that at the time. Like many global political events, that, too, was soaked in deception and lies.
What is now emerging, especially clear since the Turkish deliberate ambush of the Russian SU-24 jet inside Syrian airspace, is that Russia is not fighting a war against merely ISIS terrorists, nor against the ISIS backers in Turkey. Russia is taking on, perhaps unknowingly, a vastly more dangerous plot. Behind that plot is the hidden role of Saudi Arabia and its new monarch, King Salman bin Abdulaziz Al Saud, together with his son, the Defense Minister, Prince Salman.
Saudi ‘impulsive intervention policy’
German media has widely reported a leaked German BND intelligence estimate. The BND is Germany’s version of the CIA. The BND report, among other things, concentrates on the rising role of the King’s son, 30-year-old Prince Mohammed bin Salman. Referring to the child prince’s important role the BND states, “The current cautious diplomatic stance of senior members of the Saudi royal family will be replaced by an impulsive intervention policy.”
Prince Salman is Defense Minister and led the Kingdom, beginning last March, into a mad war, code-named by Salman as “Operation Decisive Storm,” in neighboring Yemen. Saudis headed a coalition of Arab states that includes Egypt, Morocco, Jordan, Sudan, the United Arab Emirates, Kuwait, Qatar and Bahrain. The Prince is also head of the Saudi Economic Council which he created.
The new King, Salman, is not the benign sweet guy his PR staff try to paint him.
As my soon-to-be-released book, The Lost Hegemon: Whom the gods would destroy, documents in detail, ever since CIA Cairo Station Chief Miles Copeland organized the transfer of the Muslim Brotherhood, banned in Egypt for an alleged assassination attempt against Nasser, to Saudi Arabia in the early 1950’s, there has existed a perverse marriage of the Saudi monarchy and radical “Islamic” terrorist organizations. As described by John Loftus, a former US Justice Department official, by the joining of Egypt’s Muslim Brothers and Saudi strict Islam, “they combined the doctrines of Nazism with this weird Islamic cult, Wahhabism.”
Allen Dulles’ CIA secretly persuaded the Saudi monarchy in 1954 to help rebuild the banned Muslim Brotherhood, thereby creating a fusion of the Brotherhood with Saudi ultra-fundamentalist Wahhabi Islam and, of course, backed by the vast Saudi oil riches. The CIA planned to use the Saudi Muslim Brothers to wield a weapon across the entire Muslim world against feared Soviet incursions. A fanatical young terrorist named Osama bin Laden was later to arise out of this marriage in Hell between the Brotherhood and Wahhabite Saudi Islam.
King Salman was in the middle of creating Osama bin Laden’s Al Qaeda as it was later dubbed in the media. His involvement goes back to the late 1970’s when he, as Governor of Riyadh, was named head of major conservative Saudi charities later discovered financing Al Qaeda in Afghanistan and Bosnia. Salman worked intimately as the financial funding conduit for what became Al Qaeda together with bin Laden’s Saudi intelligence “handler,” then-head of Saudi Intelligence, Prince Turki Al-Faisal and the Saudi-financed Muslim World League.
King Salman in those days headed the Saudi High Commission for Relief to Bosnia-Herzegovina, a key front for al-Qaeda in the Balkans in the 1990s. According to a United Nations investigation, Salman in the 1990s transferred more than $120 million from commission accounts under his control — as well as his own personal accounts — to the Third World Relief Agency, an al-Qaida front and the main pipeline for illegal weapons shipments to al-Qaida fighters in the Balkans. Osama bin Laden was directly involved in those operations of Salman.
During the US invasion of Iraq in 2003-4, Al Qaeda entered that country, headed by Moroccan-born terrorist Abu Musab al-Zarqawi, who had pledged allegiance to bin Laden’s Al Qaeda, creating Al Qaeda in Iraq, later calling itself the Islamic State in Iraq, the Saudi-financed forerunner of ISIS. A declassified Pentagon DIA document shows that in August 2012, the DIA knew that the US-backed Syrian insurgency was dominated by Islamist militant groups including “the Salafists, the Muslim Brotherhood and al-Qaeda in Iraq.” According to author Gerald Posner, Salman’s son, Ahmed bin Salman, who died in 2002, also had ties to al-Qaida.
A Saudi Oil Imperium
If we look at the emergence of Al Qaeda in Iraq and its transformation into the Islamic State in Iraq and Syria (ISIS), it all traces back to the Saudi operations going back to the late 1970’s involving now-King Salman, Saudi Osama bin Laden, together with Saudi intelligence head, Prince Turki Al-Faisal.
Washington and the CIA worked intimately with this Saudi network, bringing bin Laden and other key Saudis into Pakistan to train with the Pakistani ISI intelligence, creating what became the Afghan Mujahideen. The Mujahideen were created by Saudi, Pakistani and US intelligence to defeat the Soviet Red Army in the 1980’s Afghanistan war, the CIA’s “Operation Cyclone.” Cyclone was Zbigniew Brzezinski’s plan to lure Moscow into an Afghan “Bear Trap” and give the Soviet Union what he called their “Vietnam.”
The so-called ISIS today in Iraq and Syria, as well as the Al Qaeda Al-Nusra Front in Syria and various other Jihad terror splinter gangs under attack from Russia and the Damascus government of Assad, all have their origins in Saudi Arabia and the activities of King Salman.
Has the King undergone a Saul-to-Paul conversion to a pacific world view since becoming King, and his son, Prince Salman as well? Despite signals in recent months that the Saudis have ceased financing the anti-Assad terror organizations in Syria, the reality is the opposite.
The Saudis Behind Erdo?an
Much attention of late is given, understandably, to the Turkish dictatorship of the thug, Recep Tayyip Erdo?an. This is especially so since his Air Force deliberately shot down the Russian SU-24 jet over Syrian territory, an act of war. What few look at are the ties of Erdo?an and his AKP to the Saudi monarchy.
According to a well-informed Turkish political source I spoke with in 2014, who had been involved in attempts to broker a peace between Assad and Erdo?an, Erdo?an’s first Presidential election campaign in August 2014 was “greased” by a gift of $ 10 billion from the Saudis. After his victory in buying the presidential election, Erdo?an and his hand-picked Prime Minister Ahmet Davuto?lu opened the doors wide to establish secret training centers for what was to be called ISIS. Under supervision of Hakan Fidan, Erdo?an’s hand-picked head of the Secret Services (MIT), Turkey organized camps for training ISIS and other terrorists in Turkey and also to provide their supplies in Syria. The financing for the Turkish ISIS operation was arranged apparently by a close personal friend of Erdo?an named Yasin al-Qadi, a Saudi banker close to the Saudi Royal House, member of the Muslim Brotherhood, financier of Osama Bin Laden and Al Qaeda since Afghanistan in the 1980’s. x
Erdo?an’s US-sanctioned and Saudi-financed terrorist training camps have brought an estimated 200,000 mercenary terrorists from all over the world, transited by Turkey in order to wage “jihad” in Syria.
But that jihad, it is now clear, is not about Allah but about Moola—money. The Saudi monarchy is determined to control the oil fields of Iraq and of Syria using ISIS to do it. They clearly want to control the entire world oil market, first bankrupting the recent challenge from US shale oil producers, then by controlling through Turkey the oil flows of Iraq and Syria.
Saudi TOW missiles to ISIS
In May 2014, the MIT transferred to ISIS terrorists in Syria, by special train, a quantity of heavy weapons and new Toyota pick-ups offered by Saudi Arabia.
Now a detailed investigation of the Turkish shoot down of the Russian SU-24 jet reveals that the Turkish F-16 jet that shot down the jet was supported by two AWACS reconnaissance planes that enabled the Turkish F-16 exact hit, a very difficult if not impossible feat against a jet as agile as the SU-24. One of the AWACS planes was a Boeing AWACS E-3A of the Saudi Arabian air force which took off from the Riyadh, Saudi Arabia airbase.
Then, as a Russian rescue helicopter rushed to the scene of the SU-24 crash, Saudi TOW anti-aircraft missiles shot the Russian helicopter down. The Saudis had sent 500 of the highly-effective TOW missiles to anti-Assad terror groups in Syria on October 9.
What we have, then, is not an isolated Russian war against ISIS in Syria. What lies behind ISIS is not just Erdo?an’s criminal regime, but far more significant, the Kingdom of Saudi Arabia and her Wahhabite allies Kuwait, UAE, Qatar.
In the true sense, ISIS is simply a “Saudi army in disguise.”
If we strip away the phony religious cover, what emerges is a Saudi move to grab some of the world’s largest oil reserves, those of the Sunni parts of Iraq, and of Syria, using the criminal Turkish regime in the role of thug to do the rough work, like a bouncer in a brothel. If Moscow is not conscious of this larger dimension, she runs the risk of getting caught in a deadly “bear trap” which will more and more remind them of Afghanistan in the 1980’s.
What stinks in Saudi Arabia ain’t the camel dung. It’s the monarchy of King Salman and his hot-headed son, Prince Salman. For decades they have financed terrorism under a fake religious disguise, to advance their private plutocratic agenda. It has nothing to do with religion and everything to do with money and oil. A look at the ISIS map from Iraq to Syria shows that they precisely targeted the oil riches of those two sovereign states. Saudi control of that oil wealth via their ISIS agents, along with her clear plan to take out the US shale oil competition, or so Riyadh reckons, would make the Saudi monarchy a vastly richer state, one, perhaps because of that money, finally respected by white western rich men and their society. That is clearly bovine thinking.
Don’t bet on that Salman.
- Emerging Market Vulnerability – The Most Likely For Disruption From Fed Liftoff
The build-up in credit or leverage in many Emerging Market economies has been an important focus for EM investors given historical episodes of credit crunches and subsequent growth slowdowns. While broadly speaking, EM stocks began to drastically underperform DM stocks at the start of QE3…
Goldman summarizes in a heat map, the EM nations with greatest potential for the upcoming Fed liftoff to cause a major disruption.
The darkest shaded regions indicate the largest risks.
The current credit landscape suggests investors should be cautious on various EMs, although not overly concerned about the aggregate picture.
- China is the “poster child” of credit imbalances and looks most exposed: a rapid private sector credit build-up has caused the credit gap1 to widen out to the highest level across EMs, with high levels of bank leverage as well. The offset is that external and government leverage are at very low levels. Korea is also exposed on similar dimensions, although to a somewhat smaller extent than China.
- Turkey and Mexico have relatively large credit gaps, but the former has seen a more rapid private sector credit buildup in recent years with a thinner reserve cover, whereas Mexico’s overall indebtedness is quite low.
- The Czech Republic and Hungary have high debt levels, with a high proportion of external debt, but other indicators are less worrying.
- India stands out as having a relatively manageable debt burden (and negative credit gap), but the banking sector there appears highly levered, which is a source of concern.
- South Africa has experienced the sharpest build-up in government debt.
Source: Goldman Sachs
- December 16, 2015 – When The End Of The Bubble Begins
Submitted by David Stockman via Contra Corner blog,
They are going to layer their post-meeting statement with a steaming pile of if, ands & buts. It will exude an abundance of caution and a dearth of clarity.
Having judged that a 25 bps pinprick is warranted, the FOMC will then plant itself firmly in front of the great flickering dashboard in the Eccles Building. There it will repose to a regimen of “watchful waiting”, scouring the entrails of the “incoming data” to divine its next move.
Perhaps the waiting won’t be so watchful as all that, however. What is actually coming down the pike is something that may put the reader, at least those who have already been invited to join AARP, more in mind of that once a year hour-long special broadcast by Saturday morning TV back in the days of yesteryear; it explained how the Lone Ranger got his mask.
Memory fails, but either 12 or 19 Texas Rangers rode high in the saddle into a box canyon, confident they knew what was around the bend. Soon there was a lot of gunfire and then there was just one, and that was only because Tonto’s pony needed to stop for a drink.
Yellen and her posse better pray for a monetary Tonto because they are riding headlong into an ambush in the canyons of Wall Street. To wit, they cannot possibly raise money market interest rates—-even by 75 bps—-without massively draining liquidity from the casino.
Don’t they know what happened to the $3.5 trillion of central bank credit they have digitally printed since September 2008? Do they really think that fully $2.8 trillion of it just recycled right back to the New York Fed as excess bank reserves?
That is, no harm, no foul and no inflation? The monetary equivalent of a tree falling in an empty forest?
To the contrary, how about recognizing the letter “f” for fungibility. What all that “excess” is about is collateral, not idle money.
The $2.8 trillion needed an accounting domicile—so “excess reserves” was as good as any. But from a financial point of view it amounted to a Big Fat Bid for existing inventories of stocks and bonds.
Stated more directly, Wall Street margined the Fed’s gift of collateral, and did so over and over in an endless chain of rehypothecation.
So that’s why December 16th will be the beginning of the end of the bubble. If the Fed were to actually raise money market rates the honest way, and in the manner employed by central banks for a century or two, it would have to drain cash from the system; and it would have to do so in the trillions in order to levitate the vast sea of money it has pinned to the zero bound.
Yet actually raising money market rates the honest way would amount to the opposite of what has gone before. That is, it would become the Big Fat Offer, triggering a selling stampede in the casino.
The front-running smart money of the bubble’s inflation phase would become a bow-wave of retreat; and the hypothecated chains of collateral would morph into a monetary black hole of margin calls and liquidations.
So the Keynesian monetary plumbers of the Eccles Building will try something truly stupid. That is, they will try to levitate the entire sea of money-like liabilities they have conjured over the last two decades, but especially since September 2008, mainly by paying higher rates of interest to banks on those $2.8 trillion of so-called excess reserves.
Well now. Will higher IOER (interest on excess reserves) cause money market funds to pay more to their long-suffering investors; or cause the repo rate on trillions of government and other fixed income securities to rise in sympathy; or lift the rate on short-term CP and the multiple other forms of wholesale money?
No it won’t. The Fed is fixing to call a rate rise but its preferred tool is powerless to make it happen. The so-called IOER scheme has always been a pointless crony capitalist sop to the Fed’s banking system constituency, anyway.
After all, we do not (yet) pay prisoners to stay in jail, but paying banks on idle reserves amounts to the same thing. Just where were they going?
The truth is, IOER payments were designed to compensate the banks for the regulatory cost of capital required to be set-aside against these assets under the new rules. So the banks got their capital costs subsidized and Wall Street got more fungible collateral in the bargain.
Yet wait until the cowboys on Capitol Hill figure this out. In not too many months down the road, the $100 billion per year of so-called “profit” which the Fed remits to the US Treasury will largely disappear, leaving one of many gapping holes in the Federal deficit that are lurking just around the corner.
That’s because even 100 basis points of IOER would cost $30 billion a year. On top of that there is also the mega-risk that prices of the $4.4 trillion of Treasury and GSE debt owned by the Fed will keep heading south, requiring it to carve out “reserves” from its earnings to offset the balance sheet losses.
The whole maneuver is a world class scam anyway, and indicative of the lunacy which passes for national policy. The Fed’s $98.7 billion of “profits” last year was generated by the $116 billion of interest paid to it by the US treasury and the GSE’s——less a goodly rake-off for system expenses and salaries and for funding contract research by say 85% of the monetary economists in the US who don’t already work for Wall Street.
Click to enlarge. (Source: The Federal Reserve.)
In any event, Congress will surely blow its top if the Fed uses up this $100 billion “deficit reducer” by paying IOER or other forms of bribes aimed at make pretend interest rate raising.
For instance, another so-called tool to effectuate rate normalization is the TDP or term deposit facility. Under that particular gem, banks may offer cash to the Fed for seven days in return for an interest rate that would presumably be above the money market rate or say 30 bps after Wednesday.
Now isn’t that brilliant! The regulated banks are drowning in excess liquidity—-so sopping up cash seven days at a time will not constrain their ability to lend in the slightest.
Nor would it elevate the money market rate of interest unless the Fed issues a humungous open-ended tender to the banking system to take any and all deposits offered. Exactly thereupon, however, the number of histrionics-filled hearings on Capitol Hill would be limited only be the number of TV crews available to cover them.
It would be perceived as, and in fact would be, a massive subsidy to the banking system. That is, a reward for not lending to main street America.
At the end of the day, the Fed will not be able to bribe the money market higher in a manner that is politically feasible. So it will be forced to repair to the old fashioned recipe——-draining cash from the Wall Street dealer markets.
Even on this matter, however, these Keynesian fools can’t manage to be honest about what they will be doing. They will offer up another tool called RRP or reverse repo; it will be described as an instrument to manage market liquidity in a manner consistent with its measured journey toward normalization.
Folks, RRP is nothing more than selling bonds with your fingers crossed.
Once they get started down this path in earnest, they will either keep rolling the RRPs, which is the same thing as selling down their $4.5 trillion inventory of treasury bonds and GSEs, or they will relent and admit the whole interest rate raising gambit had been a blithering failure.
When the US economy joins the worldwide slide into deflationary recession some time next year, this will all be academic anyway. But in the interim you haven’t seen nothing yet in terms of Fedspeak gibberish and cacophony.
Within no time the hapless 19 Federal Reserve Rangers will be debating about whether they have actually tightened in the first place; and whether any actual liquidity that they drain from Wall Street via TDF or RRP is meant to be permanent or just a short-term market stabilizing maneuver.
This much can’t be gainsaid. The combination of encroaching recession and even moderate liquidity draining moves will be enough to trigger Wall Street fainting spells, like those of this past week, and with increasing amplitude and frequency.
The fact, that the junk bond market is already falling apart and CCC yields have soared back to 17% is not just due to an isolated bust in the shale patch; its a warning that the hunt for yield that massive central bank financial repression triggered in the financial markets is about ready to become a stampede for the exists.
So get ready for the monetary gong show which starts next week.
This week’s Commerce Department report on total business sales and inventories further confirmed that the inventory to sales ratio is now decidedly in the recession red zone. This means that the Fed’s liquidity draining moves will join hands with rising risks of recession.
Can the third great bubble of this century survive a Fed that finally wants to get off the zero bound after its way too late, but can’t do it anyway without a massive crash inducing cash drain from Wall Street? And in the teeth of the next recession to boot?
Yes, the end of the bubble does begin on December 16th.
- ZARpocalypse Now?
As goes the South African Rand, so goes The World?
Source: BofAML
- Tear Gas, Water Cannons Deployed In Germany As Leftists, Neo-Nazis, Police Clash
One thing you might have noticed if you’ve followed the short history of Germany’s migrant “miracle” is that citizens’ celebratory mood (characterized initially by the “sweets, toys, and hugs” Syrian refugees received upon arriving in Germany after completing the increasingly arduous Balkan route) has gradually been replaced by a creeping skepticism towards the asylum seekers and towards the “iron chancellor’s” open-door policy for refugees.
Just two days ago, we highlighted the following graphic from WSJ which we called “the scariest chart for Angela Merkel” (TIME magazine’s recently crowned person of the year):
And here’s a look at the political context:
Even before the Paris attacks and the subsequent bomb scare in Hanover, the tide was already turning in terms of public sentiment.
Put simply, it’s not clear that Germans understood what the numbers meant until they came face to face with the influx.
None of this is to say that there aren’t still large parts of the German electorate that support Merkel’s “yes we can” approach, it’s simply to say that reality is beginning to sink in regarding what it means to take in one million people in the space of just six months when you are a country whose entire population is just 81 million.
Some groups have been against the open-door approach from the very beginning. PEGIDA (which stands for Patriotic Europeans Against the Islamization of the West), for instance has regained much if not all of the momentum the movement lost earlier this year when Lutz Bachmann posted a picture of himself dressed as Hitler on Facebook with the caption “He’s Back” (read more about recent PEGIDA rallies here).
On Saturday, we got the latest example of social and political unrest in Germany when an attempt by leftists to disrupt right wing demonstrations turned violent. As RT recounts, “about 150 members of different far-right organizations marched through the southern part of Leipzig. They included the neo-Nazi party Die Rechte (the Right), xenophobic organization Offensive für Deutschland (OfD) (Offensive for Germany), and a division of the PEGIDA movement called Thugida.”
Things apparently turned ugly when protestant pastor and youth worker Lothar Konig, 61, showed up with his “loudspeaker van.”
Here’s more from Deutsche Welle:
In 2011, König, had denied similar alleged transgressions when resisting far-right extremists in Dresden.
The clashes on the fringe of a leftist counter-rally were described by Leipzig’s Social Democrat (SPD) mayor Burkhard Jung as “shocking.”
“That is open street terror,” Jung said, adding that “criminals” had discredited important, peaceful protest against neo-Nazis.
On Saturday, the neo-Nazis had intended to march through Leipzig’s alternative lifestyle district of Connewitz. But authorities refused them entry, citing safeguards needed for a pre-Christmas market and concert.
During the violence in Südvorstadt rubbish containers were set ablaze, a bus stop demolished and windows broken.
A police spokeswoman said masked persons in leftist ranks had attacked police “massively” during the rally by “a thousand violently-inclined leftist autonomists.”
In the early hours of Saturday car tires and rubbish containers and the roof of a warehouse had been set on fire.
The Left party said one of its newly set up offices had been attacked by right-wing extremists, resulting in 5,000-euros worth of damage.
So apparently, the neo-Nazis weren’t the root cause of the problem here although we’re reasonably sure that the leftists would argue that any time neo-Nazis stage a march they’re bound to cause trouble due simply to the fact that they identify which a movement that’s had… how should we put this… a rather checkered history in Germany.
In any event, police brought out the tear gas and water cannons as protesters set the streets ablaze:
Elsewhere in Germany, anti-migrant sentiment is becoming readily observable. As Deutsche Welle goes on to report, “asylum seekers arriving at new container-style shelter in Saxony’s town of Jahnsdorf were confronted by 30 people including six persons who threw stones and explosive crackers at their bus,” on Thursday, the same day that the “children of refugee families were attacked by fellow school pupils in the town of Wurzen near Leipzig.”
Because we couldn’t imagine a more accurate way to describe the situation (and indeed we’ve been saying this for months), we’ll simply close by quoting Aydan Özoguz, from the German government’s commission for the integration of foreigners, who says he fears the country is descending into a “xenophobic abyss.”
- Trump's Cunning Plan Revealed
Donald Trump – Bigot, zealot, xenophobe, racist, hitler-ite? Or Donald Trump – cunning strategist who knows Americans better than the "leave us alone up here on our Hill" career politicians and their lackey liberal media partners?
You decide…
As YouGov reports, a majority of Americans say that they view Islam unfavorably, and even Democrats are almost twice as likely to view Islam negatively than positively.
One week ago the United States saw the deadliest terrorist attack it has seen since 9/11, after 14 people were killed in San Bernadino by Syed Farook and his wife Tashfeen Malik. In the wake of the attack Republican presidential candidate Donald Trump took his most aggressively anti-Muslim stance so far by calling for Muslims to be barred from entry into the United States. Though the United States has millions of Muslims, anti-Muslim sentiment has become increasingly common in public discourse.
YouGov/HuffPost's latest research shows that most Americans have an unfavorable opinion of Islam. 58% of Americans have an unfavorable opinion of Islam, and just over a third (35%) say that they have a 'very unfavorable' opinion of the religion. Only 17% of Americans view it positively. Democrats (27%) are the most likely to have a favorable opinion of Islam, but even they tend to say that they view Islam negatively. Among independents (58%) and Republicans (75%) most people have a negative view of Islam.
Under-30s (45%) are the least likely to have unfavorable opinions of Islam, but 65% of over-65s view Islam unfavorably.
So, is Trump merely reflective of the real American "values"?
Finally, here is Patrick Buchanan, of Buchanan.org, explaining the odd hypocrisy in the establishment's unhinged response to Trumps' call:
Calling for a moratorium on Muslim immigration “until our country’s representatives can figure out what the hell is going on,” Donald Trump this week ignited a firestorm of historic proportions.
As all the old hate words — xenophobe, racist, bigot — have lost their electric charge from overuse, and Trump was being called a fascist demagogue and compared to Hitler and Mussolini.
The establishment seemed to have become unhinged.
Why the hysteria? Comes the reply: Trump’s call for a temporary ban on Muslim immigration tramples all over “American values” and everything we stand for, including the Constitution.
But is this really true?
The Constitution protects freedom of religion for U.S. citizens. But citizens of foreign lands have no constitutional right to migrate. And federal law gives a president broad powers in deciding who comes and who does not, especially in wartime.
In 1924, Congress restricted immigration from Asia, reduced the numbers coming from southern and Central Europe, and produced a 40-year moratorium on most immigration into the United States.
Its authors and President Coolidge wanted ours to remain a nation whose primary religious and ethnic ties were to Europe, not Africa or Asia.
Under FDR, Truman and JFK, this was the law of the land.
Did this represent 40 years of fascism?
Why might Trump want a moratorium on Muslim immigration?
- Reason one: terrorism. The 9/11 terrorists were Muslim, as were the shoe and underwear bombers on those planes, the Fort Hood shooter, the Times Square bomber and the San Bernardino killers. And as San Bernardino showed again, Islamist terrorists are exploiting our liberal immigration policies to come here and kill us. Thus, a pause, a timeout on immigration from Muslim countries, until we fix the problem, would seem to be simple common sense.
- Second, Muslims are clearly more susceptible to the siren call of terrorism, and more likely to be radicalized on the Internet and in mosques than are Christians at church or Jews at synagogue. Which is why we monitor mosques more closely than cathedrals.
- Third, according to Harvard’s late Samuel Huntington, a “clash of civilizations” is coming between the West and the Islamic world. Other scholars somberly concur. But if such a conflict is in the cards, how many more millions of devout Muslims do we want inside the gates?
Set aside al-Qaida, ISIS and their sympathizers. Among the 1.6 billion Muslims worldwide are untold millions of followers of the Prophet who pray for the coming of a day when sharia is universal and the infidels, i.e., everyone else, are either converted or subjugated.
In nations where Muslims are already huge majorities, where are the Jews? Where have all the Christians gone?
With ethnic and sectarian wars raging in Afghanistan, Iraq, Syria, Turkey, Yemen, Libya, Nigeria and Somalia, why would we bring into our own country people from all sides of these murderous conflicts?
Many European nations — Germans, French, Swedes, Brits — appear to regret having thrown open their doors to immigrants and refugees from the Islamic world, who have now formed unassimilated clusters and enclaves inside their countries.
Ought we not explore why, before we continue down this road?
In some countries of the Muslim world, Americans who embrace “Hollywood values” regarding abortion, adultery and homosexuality, can get their heads chopped off as quickly as converts to Christianity.
In what Muslim countries does Earl Warren’s interpretation of the First Amendment — about any and all religious presence being banned in public schools and all religions being treated equally — apply?
When is the next “Crusade for Christ” coming to Saudi Arabia?
Japan has no immigration from the Muslim world, nor does Israel, which declares itself a Jewish state. Are they also fascistic?
President Obama and the guilt-besotted West often bawl their apologies for the horrors of the Crusades that liberated Jerusalem.
Anyone heard Muslim rulers lately apologizing for Saladin, who butchered Christians to take Jerusalem back, or for Suleiman the Magnificent, who conquered the Christian Balkans rampaging through Hungary all the way to the gates of Vienna?
Trump’s surge this week, in the teeth of universal denunciation, suggests that a large slice of America agrees with his indictment — that our political-media establishment is dumb as a box of rocks and leading us down a path to national suicide.
Trump’s success tells us that the American people really do not celebrate “globalization.” They think our negotiators got snookered out of the most magnificent industrial machine ever built, which once guaranteed our workers the highest standard of living on earth.
They don’t want open borders or mass immigration. They want people here illegally to be sent back, the borders secured, and a moratorium imposed on Muslim immigration until we fix the broken system.
As for the establishment, they are saying pretty much what The Donald is saying. To paraphrase Oliver Cromwell’s speech to the Rump Parliament: You have sat here too long for any good you have done here. In the name of God, go!
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And if you still need further proof.. here are the numbers…
- China's Gold Army
Submitted by Koos Jansen via BullionStar.com,
Withdrawals from the vaults of the Shanghai Gold Exchange, which equal Chinese wholesale gold demand, in week 46 accounted for 49 tonnes. Year to date withdrawals have reached 2,362 tonnes.
As part of the wide analysis of the Chinese domestic gold market I would like to share that since the seventies there is a special army in China dedicated to gold. It’s called The Gold Armed Police – if you can read Chinese have a look at this Wikipedia page.
It’s no coincidence this army came into existence in 1979, eight year after the US left the gold standard and when China started opening up under the guidance of Deng Xiaoping. As, this was the moment the Chinese slowly started to reform their economy and made the first preparations in their gold market. They knew, among others, the global dollar standard wouldn’t last forever.
On 29 October 1976 representatives of the Chinese central bank and the Federal Reserve (US, Arthur Burns) met in China and discussed international economics. From Wikileaks:
IN INTERNATIONAL ECONOMICS, THE DISCUSSION CONSISTED MAINLY OF QUESTIONS BY THE CHINESE AND ANSWERS BY DR. BURNS, ALTHOUGH THE CHINESE VIEW THAT INFLATION IS A SYMPTOM OF ECONOMIC WEAKNESS CAME THROUGH CLEARLY. THE CHINESE ASKED ABOUT DR. BURNS’ VIEWS OF THE IMF CONFERENCE AND WERE PARTICULARLY INTERESTED IN THE IMF GOLD AUCTIONS, AND THE ISSUANCE OF SDR’S. THE CHINESE ASKED ABOUT THE PROBLEM OF CONTROLLING THE $200 BILLION IN EURODOLLARS, AND GAVE THE IMPRESSION THAT THEY CONSIDERED THE EURODOLLAR MARKET A THREAT TO EXCHANGE RATE STABILITY, WHICH BY IMPLICATION THEY SEEMED TO FAVOR. THEY ALSO ASKED ABOUT COMPARATIVE GROWTH RATES AMONG THE OECD COUNTRIES. AGAIN, THE CHINESE BANKERS WERE WELL INFORMED AND HAD THEIR QUESTIONS WELL PREPARED.
In the quote from Wikileaks we can clearly read the Chinese were interested in gold. However, the Chinese economy was completely centrally planned at the time and they were not a member of the World Trade Organization or the giant exporter of goods they are now. Therefor, I suspect China had little resources to acquire gold – in the seventies China’s foreign exchange reserves were very small – while they urgently needed to increase their reserves.
Initially the Gold Armed Police was established to develop China’s domestic mining industry. China’s domestic mining output grew by an incredible 2,964 % from 1976 until 2014, according to data from the China Gold Association, and this was partially due to gold exploration by the Gold Armed Police.
Remember that before 2002 the PBOC had the monopoly on all gold trade in China. Mining output (and potential import) was transferred to the PBOC that set the domestic gold price and distributed the gold to a limited amount of designated jewelry shops or kept the metal for its official reserves. The Gold Armed Police and the PBOC must be closely associated.
Next to exploration the Gold Armed Police was also assigned to guard the mines and to do other tasks. And here is where it becomes interesting. Gold market insider James Rickards has written in The Death Of Money (2014):
A senior manager of G4S, one of the world’s leading secure logistics firms, recently revealed to a gold industry executive that he had personally transported gold into China by land through central Asian mountain passes at the head of a column of People’s Liberation Army tanks and armored transport vehicles. This gold was in the form of the 400- ounce “good delivery” bars favored by central banks rather than the smaller one- kilo bars imported through regular channels and favored by retail investors.
Although Rickards notes the convoy was lead by the People’s Liberation Army I think it’s very likely the Gold Armed Police was involved in this transport that contained monetary gold directed to PBOC vaults. We can speculate the Gold Armed Police is active in distributing the PBOC’s monetary gold into the mainland.
The Gold Armed Police in April 2011, about 100 soldiers from the 7th detachment in Xinjiang.
The other day I spoke to a gold market insider, that likes to remain anonymous, who told me “some central banks send their own airplanes to London to pick up monetary gold” when we were discussing purchases from China’s central bank in the UK. I’m quite sure the PBOC has bought a substantial amount of gold in London in recent years and I suspect the Gold Armed Police is distributing the monetary metal.
So how does the PBOC buy gold in London? Through which proxy do they do they purchase the metal? Well, that’s hard to say. But, if I may freely speculate the Bank Of China is part of this. If we read the Chinese Wikipedia page about the Foreign Exchange Reserves of the People’s Republic of China (not the English page) it states:
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The FX reserves of the Chinese mainland are State-owned assets and managed by SAFE and the PBOC, the actual business operations are carried out by the Bank of China.
SAFE (State Administration Of Foreign Exchange) is the largest Chinese sovereign wealth fund that manages the PBOC’s foreign exchange reserves.
The Bank Of China is a commercial state-owned bank and LBMA member that can be one of the proxies for the PBOC’s monetary gold purchases around the globe. So, possibly the Bank Of China buys gold in the London OTC market, which is then transported by the Gold Armed Police to PBOC vaults in Beijing.
Below is an article I found on The China Times about the Gold Armed Police:
Source The China Times, Global Edition
China has a military unit dedicated to gold exploration, this unit is the only one of its kind in the world.
The gold exploration unit was established in the beginning of China’s reform and opening up, when the country urgently needed to increase its gold reserves. The unit has found more than 1800 tons of gold so far, helping China become the world’s largest gold-producing country.
China’s annual gold production was merely 4 tons when PRC was founded. After the gold exploration unit of the Chinese People’s Liberation Army was established in 1979, 12 detachments were sent to all over China. The picture shows soldiers from the 7th detachment of the gold exploration unit singing songs on their way in March 2006.
Gold reserves are usually located in remote and inaccessible areas. The picture shows soldiers from the 8th detachment of the gold exploration unit fighting sandstorm in Lop Nur in August 2002.
In 1995, China’s gold production for the first time exceeded one hundred tons, taking the 8th place in the world. More than half of the gold reserves were found by the gold exploration unit. Eight years later, China’s annual gold production exceeded 200 tons. The picture shows a soldiers from the 8th detachment of the gold exploration unit carrying out explosion works in August 2002.
July 2000, soldiers from the 8th detachment panning alluvial gold in Xinjiang. In 30 years, the gold exploration unit has found many large-scale gold deposits, in total found more than 1800 tons of proven gold reserves.
Lop Nur, August 2002, soldiers from the 8th detachment cooking meals in tent, two days later, the tent was swept away by flood.
Lop Nur, August 2002, soldiers from the 8th detachment having lunch together.
April 2011, about 100 soldiers from the 7th detachment carrying out geology and resources survey tasks in Xinjiang.
May 2011, soldiers from the 6th detachment taking a break after long-hours hard work in Qilian Mountain, Qinghai.
Natural gold nugget found by the gold exploration unit in 1983, it contains 1114 grams of pure gold.
- "Coppock Guide" Signals A Bear Market Is At Hand
With Emerging Market currencies, bonds, and stocks collapsing, US corporate debt crashing, and carry trades unwinding everywhere (ahead of the $800 billion liquidity withdrawal that looms from next week's 25bps hike from The Fed), it is no surprise that US equities are beginning to shudder (even the FANGs are not immune). But, as InvesTech Research notes, among its 6 compelling reasons to be cautious in 2016, the so-called Coppock Guide may be close to confirming that a bear market is at hand…
In March 2015, the Coppock Guide was signaling that both primary and secondary momentum had peaked and this continues to be the case today.
The Coppock Guide is a valuable tool to gauge the emotional state of a market index as it transitions from one psychological extreme to another. It was developed more than 50 years ago by Edwin S. Coppock and it measures momentum by taking a 10-month weighted moving total of a 14-month rate of change plus a 11-month rate of change of a market index.
The Coppock Guide is typically most useful at market bottoms, when market indexes reverse sharply as psychology shifts. It signals a “Best Buy” opportunity when the index turns upward from below “0” (see black dashed lines). The last such buy signal came within 60 days after the March 2009 market bottom.
Early in a bull market, momentum runs high and often peaks early. For this reason, the Coppock Guide isn’t as effective in identifying market tops. In fact, the initial peak in the Coppock Guide was seen during the first 18 months of this lengthy bull market, with a secondary peak in March 2014.
When a double-top occurs in an extended bull market without the Coppock falling below “0”, it signals that psychological excess could be at an extreme. And when that momentum finally peaks (see red dashed lines), it usually means a bear market isn’t far behind. This phenomenon was first observed by a market technician named Don Hahn in the late 1960s. Since 1929, there have been only eight instances of a double-top, and each one was followed by bear market losses of 30% or more.
We are currently seeing the likely completion of a double top (yellow shading on upper chart). When the Coppock Guide falls below zero, it confirms that a bear market is in place 77% of the time. The current value is 4.9 – which has resulted in a further drop below zero in 22 out of 24 instances.
Bottom line: If the Coppock Guide continues falling through zero, the probability of a bear market will increase… as will our portfolio defenses.
- The American Dream "Exposed" In 22 Depressing Datapoints
Submitted by Michael Snyder via The End of The American Dream blog,
Once upon a time, middle class households took home 62 percent of all income in America. Today, that number has dropped to just 43 percent. This is just one of the absolutely astounding statistics that you will read about in this article. Over the years, the middle class in America has been in steady decline. Our incomes have been going down, our net worth has been going down, the quality of our jobs has been going down, and yet the cost of living just keeps going up. As a result of all of these factors, more Americans are living in poverty today than ever before, and dependence on the government has exploded to unprecedented levels.
But of course it doesn’t take a genius to figure any of this out. In fact, politicians of all stripes are saying the exact same thing during this election season…
Bernie Sanders says it is in the midst of “a 40-year decline.” Jeb Bush says it is “shrinking.” Ted Cruz says it is “headed in the wrong direction.” And Hillary Clinton says the “basic bargain” that hard work could move families into the middle class “has eroded.”
Sadly, when we send these politicians to Washington D.C. they just continue on with business as usual. No matter who resides in the White House and no matter who controls Congress, the game remains the same and the middle class just continues to suffer. The following are 22 cold, hard pieces of evidence that show that the middle class in America is dying…
#1 This week we learned that for the first time ever recorded, middle class Americans make up a minority of the population. But back in 1971, 61 percent of all Americans lived in middle class households.
#2 According to the Pew Research Center, the median income of middle class households declined by 4 percent from 2000 to 2014.
#3 The Pew Research Center has also found that median wealth for middle class households dropped by an astounding 28 percent between 2001 and 2013.
#4 In 1970, the middle class took home approximately 62 percent of all income. Today, that number has plummeted to just 43 percent.
#5 There are still 900,000 fewer middle class jobs in America than there were when the last recession began, but our population has gotten significantly larger since that time.
#6 According to the Social Security Administration, 51 percent of all American workers make less than $30,000 a year.
#7 For the poorest 20 percent of all Americans, median household wealth declined from negative 905 dollars in 2000 to negative 6,029 dollars in 2011.
#8 A recent nationwide survey discovered that 48 percent of all U.S. adults under the age of 30 believe that “the American Dream is dead”.
#9 At this point, the U.S. only ranks 19th in the world when it comes to median wealth per adult.
#10 Traditionally, entrepreneurship has been one of the engines that has fueled the growth of the middle class in the United States, but today the level of entrepreneurship in this country is sitting at an all-time low.
#11 If you can believe it, the 20 wealthiest people in this country now have more money than the poorest 152 million Americans combined.
#12 The top 0.1 percent of all American families have about as much wealth as the bottom 90 percent of all American families combined.
#13 If you have no debt and you also have ten dollars in your pocket, that gives you a greater net worth than about 25 percent of all Americans.
#14 The number of Americans that are living in concentrated areas of high poverty has doubled since the year 2000.
#15 An astounding 48.8 percent of all 25-year-old Americans still live at home with their parents.
#16 According to the U.S. Census Bureau, 49 percent of all Americans now live in a home that receives money from the government each month, and nearly 47 million Americans are living in poverty right now.
#17 In 2007, about one out of every eight children in America was on food stamps. Today, that number is one out of every five.
#18 According to Kathryn J. Edin and H. Luke Shaefer, the authors of a new book entitled “$2.00 a Day: Living on Almost Nothing in America“, there are 1.5 million “ultrapoor” households in the United States that live on less than two dollars a day. That number has doubled since 1996.
#19 46 million Americans use food banks each year, and lines start forming at some U.S. food banks as early as 6:30 in the morning because people want to get something before the food supplies run out.
#20 The number of homeless children in the U.S. has increased by 60 percent over the past six years.
#21 According to Poverty USA, 1.6 million American children slept in a homeless shelter or some other form of emergency housing last year.
#22 The median net worth of families in the United States was $137, 955 in 2007. Today, it is just $82,756.
That last number really stunned me.
According to Pew Research, the median net worth of U.S. families has fallen by more than $55,000 since 2007.
That sure doesn’t sound like an “economic recovery” to me.
I think that everyone can agree that we have a major problem on our hands.
So what is the solution?
Well, in order to have a healthy middle class, we need to have an economy that produces lots of middle class jobs and lots of thriving small businesses. But in America today, our small businesses are being strangled out of existence by mountains of red tape and excessive taxation, and millions of middle class jobs have been shipped out of the country to other nations where it is legal to pay slave labor wages.
Until we start doing things differently, we are going to continue to get the same results that we have been getting, and the middle class will just keep getting smaller and smaller and smaller.
The middle class is now a minority in this country. How much worse do things have to get before we say that enough is enough? Are we just going to stand on the sidelines and watch the middle class disappear entirely?
At one time, the United States had the most vibrant middle class the world had ever seen. We were the envy of the rest of the planet, and people all over the world wanted to come here and live out “the American Dream”.
Unfortunately, “the American Dream” is now dying, and most Americans don’t seem to care.
What in the world is it going to take for people to finally wake up and start taking action?
- Austria Proudly Shows Off The 15 Tons Of Gold It Repatriated From London
On May 28, the Austrian Central Bank surprised the world when it announced that it too would follow in the footsteps of Germany and the Netherlands, and repatriate half of its sovereign physical gold, currently held almost entirely at the Bank of England, to Austria while transferring a modest portion in Switzerland by the year 2020.
Back then, the central bank headed by Ewald Nowotny said it took the decision after recommendations made by the Austrian Court of Audit in February, which warned of a “heightened concentration risk” linked to storing the majority of its reserves in Britain. At the time, the bank had argued the policy was warranted because London was a major international centre for the gold trade.”
This was the official statement the Austrian National Bank (OeNB) released in May:
In May 2015, the gold reserves held by the OeNB amounted to 280 tons, having remained unchanged since 2007. Austria’s gold reserves are fully owned by the OeNB, which maintains and manages them with utmost care. In line with the OeNB’s current gold storage policy, 17 % of its gold holdings are at present kept in Austria, 80 % in the United Kingdom and 3 % in Switzerland.
Recently, the Governing Board of the OeNB adopted the 2020 gold storage policy following a regular in-house gold strategy and storage policy review, while also considering the recommendations made by the Austrian Court of Audit. The cornerstones of this policy are as follows:
- By the year 2020, 50% of Austria’s gold reserves are to be held in Austria (OeNB and Münze Österreich AG), 30% in London and 20% in Switzerland.
- Starting from mid-2015, the new storage policy will be gradually implemented in keeping with security and logistical requirements.
- A comprehensive review and, if need be, adaptation of the storage policy is scheduled for 2019.
- The OeNB will regularly report on the progress in its upcoming annual reports.
What the central bank did not say, is that by repatriating its gold from the UK, it was implicitly confirming that trust is now very publicly fraying at the highest levels of the international monetary system, with first Germany, then the Netherlands, then Austria, and most recently China, all demonstrating they are moving and/or building up their domestic gold reserves, and withdrawing their gold held at either the NY Fed or the Bank of England, something hardly surprising for those who have read our article explaining What Happens When You Hand Over Your Gold To The Bank Of England For “Safekeeping”.
Which is also why yesterday, with great fanfare, Austria proudly announced to the world that it has moved 15 tonnes of gold from London of its gold reserves as part of its aforementioned repatriation plan.
“By the end of November, the Austrian National Bank brought 15 tonnes of its gold back into its own vaults,” the OeNB said in a statement. A spokesman for the central bank said it had begun repatriating the gold from London in October.
According to Reuters, after the repatriation, Austria held roughly 65 tonnes of gold, or about 23 percent of its reserves, on its territory, the spokesman said. Around three quarters, 209 tonnes, were in London, he said, and six tonnes were in Switzerland.
“London and Zurich remain the most significant trading centres for physical gold,” the OeNB said in its statement, a point it has made before in explaining why it kept such a large share of its reserves abroad.
In the decades after World War Two, security concerns also played a part because international trading centres were the best place to make use of the gold if needed in the case of an international crisis, the OeNB said in its statement.
“Geopolitical considerations in the time of the Cold War also played a role,” said the central bank in Vienna, which was only an hour’s drive away from the Iron Curtain that divided Europe for four decades.
It would appear that despite conditions between the west and Russia deteriorating to levels not seen since the depths of the cold war, Austira is more confident it can withstand the renewed Russian “threat” by storing its gold in house, rather than “trusting” Goldman’s Mark Carney, currently performing his GS alumnus duties as the head of the Bank of England, with possession of its gold.
How times have changed.
* * *
But perhaps what was most surprising about the repatriation is that in order to “prove” the gold is indeed back, the Austrian central bank also released a 3 minute clip showing not only where the Austrian gold is located now:
… but where it is headed:
… how it is measured:
… how it is tested using ultrasound:
… while validating its Rand Refinery serial numbers (read more about the refinery that has processed one third of all gold ever mined here):
… and finally holding a gold welcoming celebration party for media and journalists in its vault room:
The full clip is below.
We congratulate the Austrians on have such access and transparency to their own gold: sadly, for some unknown reason, when it comes to the US gold held at Fort Knox, the secrecy over the past several decades has prevented any member of the media or public to observe the thousands of tons which the US allegedly holds in storage. On behalf of the general population.
We wonder: why do Austrians celebrate the arrival of their gold and televize it for the entire world to see, while the world’s allegedly biggest gold inventory remains a national secret, even, or rather especially, from those to whom it supposedly belongs – the citizens of USA?
- Zombies, Cronies, And The Trouble With Yellen's Future
Submitted by Bill Bonner of Bonner & Partners (annotated by Acting-Man.com's Pater Tenebrarum),
“As democracy is perfected, the office of the President represents, more and more closely, the inner soul of the people. On some great and glorious day, the plain folks of the land will reach their heart’s desire at last and the White House will be occupied by a downright fool and complete narcissistic moron.”
– H.L.Mencken
All over the world, elections allow the people to express their innermost thoughts and feelings. This was a big week in Argentina, for example. Outgoing president Cristina Kirchner is supposed to hand over power to her successor, Mauricio Macri.
But when we looked yesterday, there was dispute as to exactly what time the baton would be passed. And Cristina has let it be known she would not attend the inaugural and would generally make life as difficult for Mr. Macri as possible.
This photo is simply too funny not to show it – it cries out for a caption contest actually. Background: Kirchner asked Macri to visit her in the presidential palace, so she could personally congratulate him on his victory. And she said to him to “come alone”, which immediately spawned the twitter hashtag #VeniSolo (#ComeAlone)
Image from an #VeniSolo tweet …
Deep State in Control
Elections are misunderstood. On the surface they are contests between zombies and cronies. The zombies (leftists, socialists, Democrats) want lots of little handouts. The cronies (rightists, Wall Streeters, Republicans) want fewer but bigger ones.
All the loot comes from the voters – who willingly give up both their money and their liberty believing that, somehow, they are better off for it. But the real winner is the Deep State. It usually controls the candidates… and continues to gain power and resources, no matter which side wins.
But the Deep State is not immune to setbacks. On the pampas, it must be worried that Macri may actually believe in free markets rather than markets controlled by cronies. If so, it may be harder to work with him than they had hoped.
The Deep State meme is really getting ingrained – now there’s even a comic book entitled “Deep State”
Image credit: Matt Taylor
And in the U.S., poor Janet Yellen must be having trouble sleeping again. The Deep State, the zombies, the cronies – all turn their black hearts and beady eyes unto her.
Next Wednesday, she takes center stage again. And with the whole world watching, she’ll make a complete fool of herself.
The Trouble with the Future … and Yellen’s Next Move
Yellen is supposed to announce a tiny increase in the Fed’s key lending rate… currently sitting at 0.25%. Analysts will examine every word. Commentators will report, confuse, and misinterpret her remarks. And the economy and the markets will react.
But they may not react as the insiders hope.
Each generation has its market myths. Each decides what is important and what is not. The generation of the 1970s and 1980s watched inflation rates and money supply figures.
Investors had been beaten up by the inflation of the 1970s. Then they learned from Milton Friedman at the Chicago School that inflation was “always and everywhere a monetary phenomenon.” So they began to watch the Fed’s M2 money supply figures like scouts looking for early warning of an enemy attack.
The attack never came. The rate of consumer price inflation fell from a high of about 15% in 1980 to its near-zero levels today. Investors are always looking in the wrong direction. They have to be…
“I’m going home to the U.S. to die,” said an old friend the other day.
“If you know you’re going to die at home,” we asked, “why not stay in Paris?”
Likewise, if investors knew what the future held, it wouldn’t happen that way. They would sell their positions before the top was in, avoiding a crash. And they’d buy before stocks hit rock bottom, never allowing a bear market to fully express itself.
The future remains a mystery … particularly to modern-day economic forecasters
Image credit: Scanpix
Surprises would be eliminated. Accidents avoided. If everyone knew where they would have a fender-bender, auto-body shops would be out of business! That is the trouble with the future: It must come as a surprise.
Looking in the Wrong Direction
We talk about borrowing as “taking from the future.” But it’s not really possible. Because the future hasn’t happened yet. It’s just a metaphor for understanding what is going on.
Farmers – at least in the old days – saved some of their corn each year as “seed corn.” This is what they would plant the following year. And if they ate it rather than saving it, they would have been “taking from the future.” Next year’s crop would be reduced as a result. More today but less tomorrow.
But it is always a risk to take from tomorrow. Centuries ago, fewer seeds – and perhaps less rainfall, or too much rainfall, or too much wind, or hail, or frost – might have meant starvation. What might it mean today?
We don’t know. The future is always a surprise… especially to people with PhDs in economics. And now we watch Ms. Yellen. Acres of print will be devoted to speculating on how much of an increase she will announce… and how it will be followed up.
Does it even matter?Guessing about the “pace of tightening” (that is, how soon will the first rate hike be followed by another) and positioning portfolios for tighter money – more dollars, less emerging market debt – are already growth businesses.
Could it be that investors are looking in the wrong direction? Has the future moved on… without Ms. Yellen? Have stocks already topped out? Are sales already dropping? Is subprime student, energy, auto, corporate, and emerging market debt already sinking?
Have the trains already left their stations, headed to destinations that investors haven’t even thought of? Could it be that the Deep State’s debt-based financing system is already in trouble? And, after 84 months of zero interest rates and roughly $4.5 trillion of central bank stimulus, can Ms. Yellen save it?
- President Obama Explains How He Just 'Saved' The World From Its Greatest Threat – Live Feed
"Mission Accomplished?" Amid failure after failure for President Obama's 'legacy' policies, Americans can rest assured that the "historic" signing of today's climate accord will be spun in its most positive, "see, I saved the world from its greatest threat" awesomeness, despite, as we detailed earlier, the utter farce of it all.
Despite its watering down for The Saudis, and total lack of enforceability, leaders and the environmental community hailed the United Nations agreement has a historic turning point that has the potential to stave off the worst expected effects of global warming.
The media is already crowing of Obama's "big win"…
Adoption of the accord is a major win for President Obama. He has made it a central piece of his second-term climate agenda to get an international agreement, since domestic action can only make a small dent in the world’s greenhouse gases.
Obama has taken a leading international role leading up to the Paris conference, securing major environmental pledges from countries like Brazil and Mexico, and the first-ever promise from China to limit its greenhouse gas output.
And so is he…And all "thanks to American leadership…"
This is huge: Almost every country in the world just signed on to the #ParisAgreement on climate change—thanks to American leadership.
— Barack Obama (@BarackObama) December 12, 2015
The #ParisAgreement will improve the world our kids and grandkids will grow old in. We are witnessing history today. And we should be proud.
— Vice President Biden (@VP) December 12, 2015
Live Feed (President Obama is due to speak at 1730ET…)
See you in 2099… After all the warm words of developed countries on a 1.5C limit, the new text contains no obligation to stay under this threshold. Shockingly, the text could allow for carbon emissions to continue until 2099.
- 500,000 Reasons Why Millennials Are Having Fewer Babies
In the US, the average age of a first-time mother is now over 26 years old, up from 21.4 years-old in 1970.
Through 2008-2013, the birth rate declined each year, likely the result of the financial crisis and its aftermath. Furthermore, as Goldman's Taposh Bari notes, amid the decline in births since the beginning of the Great Recession, one thing that stands out is that the decline in births has come from the youngest mothers – women under 25 years of age.
There are a number of factors that have contributed to this continued increase including: (1) advances in medicine which have increased life expectancies and are making pregnancies safer and more successful for older women; (2) higher levels of educational attainment among women; (3) the aftermath of the great recession which has led to weaker job prospects and confidence about the future; and finally, and perhaps most importantly (4) highly inflationary education costs, which, coupled with lower wages and igher educational attainment, have led to higher levels of student debt.
The cost of raising a child
A skittishness around family formation is bourne out in other data series like rates of home homeownership and marriage. Having a child is probably one of the most expensive decisions a parent will make in their life. In 2013, the annual cost of raising a newborn was approximately US$13k for married families in the middle income bracket in the US. On a cumulative basis through age 17, families having babies will have to commit to US$245k in total spending per child (US$304k accounting for inflation).
The exhibit above excludes the cost of a college education (and all other costs for children over 17 years-old), which was US$19k (4-year public school tuition, room and board) for enrollment in the 2014-2015 academic year. Inflation adjusted, this cost is up 80% over the past 20 years, growing at real and nominal CAGRs of 2.9% and 5.4% respectively over that period.
Assuming that the rate of college education continues at its current pace, Millennial parents can expect their newborn’s college education to be US$205k, making the total cost of raising a child over US$500k.
Source: Goldman Sachs
- The West’s Alliance With Saudi Arabia Fuels Islamism
By Toby Matthiesen is a senior research fellow in the international relations of the Middle East at St. Antony’s College, University of Oxford. He is the author of “Sectarian Gulf: Bahrain, Saudi Arabia, and the Arab Spring That Wasn’t” and “The Other Saudis: Shiism, Dissent and Sectarianism.” Originally posted on the NYT.
The West’s Alliance With Saudi Arabia Fuels Islamism
One of the key contradictions of Western foreign policy toward the Middle East is the strong alliance with Saudi Arabia. With its vast oil resources and its strategic location between the Red Sea and the Persian Gulf, staunchly anticommunist Saudi Arabia became a key Western ally during the Cold War.
This alliance with the West and the influx of enormous oil revenues since the 1970s have allowed Saudi Arabia to export its brand of Sunni Islam, named Wahhabism after its founder Muhammad Ibn Abd al-Wahhab, encouraging the homogenization of Islamic practices around the world after the model of the Wahhabiya. Known for its rejection of pre-Islamic history, visitation of tombs, the mixing of men and women, its zeal to purify Islam from allegedly deviant practices (such as Sufism and Shiism) and its disdain for other religions, the Wahhabiya was a puritan movement that gave religious legitimacy to the conquests of the Al Saud.
The United States teamed up with Saudi Arabia to undermine the Soviet Union in 1980s Afghanistan. This cooperation with radical Islam was to have disastrous consequences and the rise of Al Qaeda and ISIS is an outcome of this pairing of an alluring ideology with the resources of an oil-rich state allied to a global superpower.
The spread of extremist Islamist ideology is then as much a result of Western foreign policy as of Saudi machinations. Western and Gulf support for the rebels in Syria followed a similar path as the one observed in Afghanistan, before ISIS started to turn against the West and the Gulf states. But it is no coincidence that ISIS is adopting Saudi religious textbooks in its schools, killing Shia in Saudi Arabia just like the early Wahhabi zealots wanted to, and generally garnering much support on a popular level in the kingdom.
The West’s strong alliance with the Saudi ruling family has not led to a moderation of the country’s religious policies. But in the recruitment strategy of ISIS it makes it much easier to describe Middle Eastern monarchies as puppets.
The key ideological difference between ISIS and the early Saudi-Wahhabi movement is that the Islamic State wants to establish a caliphate, and regards monarchy as an un-Islamic form of government. Frightened by this challenge, which the Gulf states helped to create, Saudi Arabia has reaffirmed its alliance with the conservative Wahhabi religious forces in the country.
But in ISIS, Saudi Arabia now has a foe that is so close to its own religious interpretation of Islam, that Saudi Arabia can not be seen to be fighting ISIS very strongly because it would undermine its authority at home. And so the West’s support for Middle East dictatorships continues to fuel the flames that have given rise to Al Qaeda and ISIS, despite a growing awareness that these alliances are a double-edged sword.
- Ask Santa
- World Leaders Just Agreed To A "Historic" Climate Accord… Which Is Non-Binding And Has No Enforcement Language
Great news! The "greatest threat to future generations of the world" has apparently been solved. World leaders Saturday adopted an historic international climate accord in Paris, the first-ever agreement to commit almost every country to fight climate change. However, as we knew all along and just got confirmation, the 31-page pact does not have binding language or a mechanism to force countries to live up to the promises to cut greenhouse gases emissions or provide money for developing and poor nations to cope with the effects of global warming.
Basically, COP21 was a massive taxpayer-funded boondoggle, in which "leaders" enjoyed all the perks of Paris for two weeks, burned through hundreds of millions in public funding, and created millions of tons in greenhouse gases (what do you think to private jets and government 747s use to fly?) that has achieved absolutely nothing.
In other words…
Nonetheless, leaders and the environmental community hailed the United Nations agreement has a historic turning point that has the potential to stave off the worst expected effects of global warming.
And The UN reports a large round of mutual masturbation…
A joyful atmosphere fills the plenary hall at #COP21. #ParisAgreement pic.twitter.com/ukwZgFdUZr
— United Nations (@UN) December 12, 2015
The Borg press is happy, clearly having no idea that absolutely nothing just took place:
Journo says she's watching #ParisAgreement with press (https://t.co/GOi0pu4clW), tweets video of their reaction. pic.twitter.com/bKn51UlyNS
— T. Becket Adams (@BecketAdams) December 12, 2015
Obama was delighted that "American leadership" was responsible for an agreement that is neither binding nor enforceable, in other words, something one would write on the back of a napkin:
This is huge: Almost every country in the world just signed on to the #ParisAgreement on climate change—thanks to American leadership.
— Barack Obama (@BarackObama) December 12, 2015
So, on one hand, and the hand that the same Borged media as shown in the tweet above will bombard everyone with over the next week, moments ago world leaders Saturday adopted an historic international climate accord in Paris, the first-ever agreement to commit almost every country to fight climate change.
On the other hand, the hand which will get zero mention at all, the pact has zero binding language or a mechanism to force countries to live up to the promises to cut greenhouse gases emissions or provide money for developing and poor nations to cope with the effects of global warming.
In other words, world leaders just spent hundreds of millions in taxpayer funds on an epic boondoggle in Paris to write a 31-page pamphlet summarizing everyone's best intentions about the future and… that's it.
* * *
So if the document is such a farce, what does it contain? This.
As The FT reports,
The latest draft says governments should stick to a previously agreed goal to keep warming below 2C from pre-industrial times and “pursue efforts” to stop temperatures rising more than 1.5C, a target favoured by a large number of countries at the talks but opposed by China, Saudi Arabia and others.
In order to meet this temperature goal, earlier drafts of the accord had echoed a call by G7 leaders in June for the “decarbonisation” of the global economy over the course of this century and a specific cut in greenhouse gas emissions of at least 40 per cent by 2050.
This was opposed by several countries including Saudi Arabia, a leading exporter of fossil fuels that produce carbon dioxide when burnt to produce energy.
In a statement explaining its position on Thursday, Saudi delegates said the agreement should “consider all greenhouse gas emissions and not just CO2”.
Policies to reduce emissions “must cover all sectors instead of focusing exclusively on energy” and should not “discriminate against any of the energy sources”, the Saudi delegates said.
In other words, the world's leaders are releasing a non-binding, long-enough-away-target-as-not-to-matter-for-any-of-those-involved-in-its-drafting document watered down to meet the needs of, drum roll please.. The Saudis.
After all the warm words of developed countries on a 1.5C limit, the new text contains no obligation to stay under this threshold. Shockingly, the text could allow for carbon emissions to continue until 2099.
If implemented, it would force companies and citizens to sharply reduce their use of fossil fuels and could herald in a transformation of the world economy. Which, judging by this week in Beijing…
If enforced by authorities, means China is heading for its very own Great Depression.
We leave it to Raul Ilargi Meijer (of The Automatic Earth) to explain the utter CON of this 'pact' that The IMF's Christine Lagarde has called "a critical step forward."
* * *
I understand some people may get offended by some of the things I have to say about this – though not all for the same reasons either-, but please try and understand that and why the entire CON21 conference has offended me. After watching the horse and pony show just now, I thought I’d let ‘er rip:
I don’t know what makes me lose faith in mankind faster, the way we destroy our habitat through wanton random killing of everything alive, plants, animals and people, through pollution and climate change and blood-thirsty sheer stupidity, or if it is the way these things are being ‘protested’.
I’m certainly not a climate denier or anything like that, though I do think there are questions people gloss over very easily. And one of those questions has to be that of priorities. Is there anyone who has thought over whether the COP21 stage in Paris is the right one to target in protest, whatever shape it takes? Is there anyone who doesn’t think the ‘leaders’ are laughing out loud in -plush, fine wine and gourmet filled- private about the protests?
Protesters and other well-intended folk, from what I can see, are falling into the trap set for them: they are the frame to the picture in a political photo-op. They allow the ‘leaders’ to emanate the image that yes, there are protests and disagreements as everyone would expect, but that’s just a sign that people’s interests are properly presented, so all’s well.
COP21 is not a major event, that’s only what politicians and media make of it. In reality, it’s a mere showcase in which the protesters have been co-opted. They’re not in the director’s chair, they’re not even actors, they’re just extras.
I fully agree, and more than fully sympathize, with the notion of saving this planet before it’s too late. But I wouldn’t want to rely on a bunch of sociopaths to make it happen. There are children drowning every single day in the sea between Turkey and Greece, and the very same world leaders who are gathered in Paris are letting that happen. They have for a long time, without lifting a finger. And they’ve done worse -if that is possible-.
The only thing standing between the refugees and even greater and more lethal carnage are a wide, even confusingly so, array of volunteers, and the people of the Greek coastguard, who by now must be so traumatized from picking up little wide-eyed lifeless bodies from the water and the beaches, they’ll live the rest of their lives through sleepless nightmares.
Neither Obama nor Merkel nor Hollande will have those same nightmares. And let’s be honest, will you? You weren’t even there. And still, you guys are targeting a conference in Paris on climate change that features the exact same leaders that let babies drown with impunity. Drowned babies, climate change and warfare, these things all come from the same source. And you’re appealing to that very same source to stop climate change.
What on earth makes you think the leaders you appeal to would care about the climate when they can’t be bothered for a minute with people, and the conditions they live in, if they’re lucky enough to live at all? Why are you not instead protesting the preventable drownings of innocent children? Or is it that you think the climate is more important than human life? That perhaps one is a bigger issue than the other?
Moreover, the very same leaders that you for some reason expect to save the planet -which they won’t- don’t just let babies drown, they also, in the lands the refugees are fleeing, kill children and their parents on a daily basis with bombs and drones. Dozens, hundreds, if not thousands, every single day. That’s how much they care for a ‘healthy’ planet (how about we discuss what that actually is?).
And in the hallways of the CON21 conference they’ve been actively discussing plans to do more of the same, more killing, more war. Save the world, bombs away! That’s their view of the planet. And they’re supposed to save ‘the climate’?
There are a number of reasons why the CON21 conference will not move us one inch towards saving this planet. One of the biggest is outlined in just a few quoted words from a senior member of India’s delegation -nothing new, but a useful reminder.
India Opposes Deal To Phase Out Fossil Fuels By 2100
India would reject a deal to combat climate change that includes a pledge for the world to wean itself off fossil fuels this century, a senior official said, underlying the difficulties countries face in agreeing how to slow global warming.
India, the world’s third largest carbon emitter, is dependent on coal for most of its energy needs, and despite a pledge to expand solar and wind power has said its economy is too small and its people too poor to end use of the fossil fuel anytime soon. “It’s problematic for us to make that commitment at this point in time. It’s certainly a stumbling block (to a deal),” Ajay Mathur, a senior member of India’s negotiating team for Paris, told Reuters in an interview this week.
“The entire prosperity of the world has been built on cheap energy. And suddenly we are being forced into higher cost energy. That’s grossly unfair,” he said.
This means the ‘poorer’ countries, -by no means just India; China has 155 more coal plants in the pipeline despite their pollution levels moving ‘beyond index’-, the poorer counties won’t volunteer to lower their emissions unless richer nations lower theirs even a lot more. US per capita emissions are over 10 times higher than India’s, those of the EU six times. Ergo: Step 1: lower US emissions by 90%. It also means that richer nations won’t do this, because it would kill their economies.
Which, in case you haven’t noticed, are already doing very poorly, much worse than the media -let alone politicians- will tell you. In fact, the chances that the richer countries will ‘recover’ from the effects of their debt binge are about on par with those of renewable energy sources becoming cheaper than fossil fuels -barring subsidies. If only because producing them depends entirely on those same fossil fuels. All the rest of what you hear is just con.
The people of India obviously know it, and you might as well. It’s going to cost many trillions of dollars to replace even a halfway substantial part of our fossil energy use with renewables, and we already don’t have that kind of money today. We will have much less tomorrow.
Besides, despite all the talk of Big Oil turning into Big Energy, Shell et al are not energy companies, they’re oil -and gas- companies, and they’ll defend their (near) monopolies tooth and claw. Especially now that their market caps are sinking like so many stones. They have no money left to invest in anything, let alone an industry that’s not theirs. They lost some $250 billion in ‘value’ this week alone. They’re getting killed.
In the same vein, China can’t close more than a token few of its most polluting plants. China’s getting killed economically. And for all nations and corporations there’s one principle that trumps all: competitive advantage. If going ‘green’ means losing that, or even some of it, forget it. We won’t volunteer to go green if it makes us less rich.
And who do you think represents big oil -and the bankers that finance them- more than anyone else? Right, your same leaders again, who make you pay for the by now very extensive and expensive security details that keep them from having to face you. Just like they’re planning to make you pay dearly for the illusion of a world running on renewables.
Because that’s where the profit is: in the illusion.
Whatever makes most money is what will drive people’s, corporations’, and nations’ actions going forward. Saving energy and/or substituting energy sources is not what makes most money, and it will therefore not happen. Not on any meaningful scale, that is.
There will be attempts to force people to pay through the nose to soothe their consciences -which will be very profitable for those on the receiving end-, but people’s ability to pay for this is shrinking fast, so that won’t go anywhere.
The only thing that could help save this planet is for all westerners to reduce their energy use by 90%+, but, though it is theoretically and technically feasible, it won’t happen because the majority of us won’t give up even a part of our wealth, and the powers that be in today’s economies refuse to see their profits (re: power) and those of their backers go up in -ever hotter- air.
The current economic model depends on our profligate use of energy. A new economic model, then, you say? Good luck with that. The current one has left all political power with those who profit most from it. And besides, that’s a whole other problem, and a whole other issue to protest.
If you’re serious about wanting to save the planet, and I have no doubt you are, then I think you need to refocus. COP21 is not your thing, it’s not your stage. It’s your leaders’ stage, and your leaders are not your friends. They don’t even represent you either. The decisions that you want made will not be made there.
There will be lofty declarations loaded with targets for 2030, 2050 and 2100, and none of it will have any real value. Because none of the ‘leaders’ will be around to be held accountable when any of those dates will come to pass.
An imploding global economy may be your best shot at lowering emissions. But then again, it will lead to people burning anything they can get their hands on just to keep warm. Not a pretty prospect either. To be successful, we would need to abandon our current political and economic organizational structures, national governments and ‘up’, which select for the sociopaths that gather behind their heavy security details to decide on your future while gloating with glee in their power positions.
Better still, we should make it impossible for any single one of them to ever be elected to any important position ever again. For now, though, our political systems don’t select for those who care most for the world, or its children. We select for those who promise us the most wealth. And we’re willing to turn a blind eye to very many things to acquire that wealth and hold on to it.
The entire conference is just an exercise in “feel good”, on all sides. Is there anyone out there who really thinks the likes of Bill Gates and Richard Branson will do anything at all to stop this world from burning to the ground? You have any idea what their ecological footprints are?
Sometimes I think it’s the very ignorance of the protesting side that dooms this planet. There’s a huge profit-seeking sociopathic part of the equation, which has caused the problems in the first place, and there’s no serious counterweight in sight.
Having these oversized walking talking ego’s sign petitions and declarations they know they will never have to live up to is completely useless. Branson will still fly his planes, Gates will keep running his ultra-cooled server parks, and Obama and Merkel will make sure their economies churn out growth ahead of anything else. Every single country still demands growth. Whatever gains you make in terms of lower emissions will be nullified by that growth.
And in the hallways, ‘smart’ entrepreneurs stand ready to pocket a ‘smart’ profit from the alleged switch to clean energy. At the cost of you, the taxpayer. And you believe them, because you want to, and because it makes you feel good. And you don’t have the knowledge available to dispute their claims (hint: try thermodynamics).
You’re seeking the cooperation of people who let babies drown and who incessantly bomb the countries these babies and their families were seeking to escape.
I’m sorry, I know a lot of you have a lot of emotion invested in this, and it’s a good emotion, and you’re thinking this conference is really important and all, and our ‘last chance’ to save the planet. But you’ve been had, it’s as simple as that. And co-opted. And conned.
And it’s not the first time, either. All these conferences go the same way. To halt the demise of the planet, you can’t rely on the same people who cause it. Never works.
* * *
And now we can sit back and calculate how many million tons of greenhouse gasses the private and government jets that ferried world leaders to (and soon, from) Paris, burned to get this epic farce "signed."
- Artist's Impression Of Middle-Class America
The American middle class is getting poorer. Wages have been stagnant for decades – if jobs can be found to get those wages. Jobs are exported overseas by big corporations. Small businesses get harassed with taxes and big government red tape. There are bailouts to central bankers to the tune of trillions while Main Street businesses go bankrupt. Endless QEs have propped up ‘their’ stock market, largely owned by the 1 percent. The rich are getting fabulously richer while a record number of people are on food stamps.
I blame the Federal Reserve. It’s the heart of darkness. They’re a private group of elites who get to print up money for themselves and their cronies while their mainstream media tells everyone it’s all fine and dandy. They get richer and more powerful while the middle class gets the debt and abuse. The middle class has one foot in the grave and the other foot on a banana peel, thanks to our corrupt and dysfunctional system of money.
It’s time to end audit the Federal Reserve. It’s time to end the Federal Reserve. It’s time to shut down the IRS. It’s time to end crony capitalism, which is leading us deeper into fascism.
Via RogueCartoonist.com's Ben Garrison
- Market Panics As "China's Warren Buffett" Detained In "Richter Scale 9 Event"
As several CSRC officials have learned over the past four months, being a “connected guy” vis-a-vis the Politburo does not necessarily mean you are immune when Xi and the Party decide it’s time to make an example of a few “chickens” in order to scare some “monkeys.”
China’s sweeping crackdown on sellers, “manipulators”, frontrunners, financial journalists and anyone else “suspected” of acting in such a way as to sow fear and uncertainty in the wake of the dramatic meltdown in Chinese equities that unfolded over the summer has ensnared money managers, high profile executives, and government officials alike. Earlier this week, it reached a crescendo with the disappearance of Guo Guangchang, known to some as “China’s Warren Buffett.”
As we reported on Thursday, the Fosun chief was “unreachable” according to the company which said only that it was “handling the situation.”
For anyone familiar with Beijing’s “kill the chicken to scare the monkey” campaign, it was easy to venture a guess as to what might have happened. While it seemed obvious that Guo had been “disappeared” by the Party, it wasn’t as yet clear what he was ultimately suspected of doing “wrong.” “Whether Beijing is questioning Guo about his habit of eschewing investments in China in favor of deploying capital overseas or whether Fosun did something ‘wrong’ in the markets during the selloff is hard to know,” we said.
We now have a bit more in the way of color regarding Guo’s detention and sure enough, he’s being “held in connection with an investigation.” In a statement, Fosun did not divulge Guo’s whereabouts, saying only that he’s helping with “certain investigations carried out by the mainland judicial authorities” and that he is still able to oversee “major matters” pertaining to his businesses.
As FT notes, “rumours of Mr Guo’s disappearance began to circulate in China on Thursday when influential financial publication Caixin cited unconfirmed reports that police had detained him when he arrived in Shanghai on a flight from Hong Kong.” Subsequently, business partners have only been able to establish “minimal contact” – his family has not been able to reach him.
As usual, there’s no word on whether Guo is in fact the subject of the investigation. If you’ve followed the witch hunt – which we recently learned is being run by Fu Zhenghua, a former Beijing police chief responsible for orchestrating an infamous prostitution bust, a campaign against “popular bloggers whose sometimes anti-establishment comments drew the ire of party leaders,” and a decree prohibiting police officers from drinking alcohol outside of their homes – China likes to keep the explanations as vague as possible presumably for the chilling effect the ambiguity has on the rest of the market.
Guo, who earlier this year called himself an “apprentice” of everyone’s favorite octogenarian from Omaha, is worth nearly $8 billion, a fact which may have landed him in Xi’s crosshairs. “As China’s economy slows after three decades of furious expansion, conspicuous wealth has become suspect,” WSJ says, adding that “uncertainty about his situation has added to a chill in finance circles.”
As for the wider implications of Guo’s arrest, consider the following from FT:
His disappearance will fuel anxieties in the private sector that the anti-corruption crackdown launched by President Xi Jinping three years ago is being extended to high-profile entrepreneurs and the prime beneficiaries of China’s decades of rapid growth. It initially focused on ensnaring senior members of the government and military and financiers and is now broadening to prominent businesspeople in Shanghai.
Significantly, FT also suggests that “[Guo’s] case threatens to accelerate the pace of capital flight out of China as the country’s wealthy elite scramble to shift their assets offshore and out of reach of the Chinese authorities.”
“This is Richter scale 9 for the private sector in China,” one observer who tracks China’s wealthiest people said.
Guo is also well connected in the Politburo. Here’s The Journal:
In August, the tycoon was named during the sentencing for corruption of a former senior Communist Party member in Shanghai who had run a government-owned dairy company. Mr. Guo had granted the man favors for unspecified benefits, according to China’s official Xinhua News Agency, which said that Mr. Guo wasn’t accused of wrongdoing. Fosun issued a statement at the time, saying Mr. Guo supported China’s anticorruption push.
Like many other entrepreneurs in China, Mr. Guo has also remained close to Chinese leaders with positions on numerous official bodies, while some of Fosun’s businesses have overlapped with government priorities.
He has served as a deputy to China’s legislature, the National People’s Congress, as well as represented Shanghai on a high-level government advisory body called the Chinese People’s Political Consultative Conference.
“In March 2012, he met Mr Xi as he was poised to take over as the country’s top leader, and urged him to enact a series of economic reforms, including greater court protection for insurance companies, increased lending by non-bank financial institutions and greater scope for private equity businesses to operate,” FT adds.
As we mentioned on Thursday, Fosun spent more than $6 billion buying stakes in 18 overseas companies between February and July. Here’s a snapshot:
And here’s an org chart:
Due to the fact that Guo has so much influence over the company, his absence (especially if he ends up being detained for a prolonged period) could well have a serious impact, something which WSJ notes was “illustrated in trading Friday when [a] trading halt for its primary business triggered selling in related stocks and bonds.”
In other words, it’s possible that this entire effort becomes self-defeating for Xi. If the widening probe ends up triggering trading halts and harrowing declines in the assets connected to the targets of the crackdown, then Beijing is simply fostering the type of instability it claims to be stamping out.
Furthermore, if the country’s wealthiest people start to get the idea that they too will be targeted and brought up on trumped up charges, then you can bet they will move their money out of the country by any means necessary and no UnionPay POS mointoring scheme is going to stop them. Obvisouly, just about the last thing China needs to be doing right now is creating more excuses for rich Chinese to skirt capital controls just as the CFETS telegraphs a much larger devaluation for the yuan on the horizon.
* * *
Bonus color from Deutsche Bank
Given that the company responded promptly in the past couple of episodes, we think any delay this time could be taken more negatively by the investors. Separately, it seems China has learnt its lessons from the Kaisa episode and hasn’t lifted the corporate veil in such cases, clearly differentiating between the management vs. company operations. In almost every instance since Kaisa, Chairmen/founders have resigned, letting new management run the operations. We need to be mindful that Fosun is one of China’s largest private sector enterprises and the repurcurssions of a Kaisa-like episode could be huge for China Inc.
Fosun 20s are marked around 15 points lower at ~90 (mid, 10% ytm) amidst thin liquidity, at the time of writing. This is a bit more than the roughly 10 point drop we have seen in recent times in the USD bond space in similar situations (Wuzhou being the latest). Our base case and gut feel at this stage is that the company should eventually be fine. Key risks include resignation of Mr. Guo as Chairman and possible breach of bank loan covenants (though we expect this to be waived, if at all), black box nature of company’s operations, etc.
- Good Luck Getting Your Money Out When the Next Crisis Hits
Why is it that when a banking crisis hits, everyone acts surprised?
The reason is actually quite simple: everyone at the top of the financial food chain are highly incentivized to keep quiet about the problems.
Central Banks, Bank CEOs, politicians… all of these people are focused primarily on maintaining CONFIDENCE in the system, NOT on fixing the system’s problems. Indeed, they cannot even openly discuss the system’s problems because it would quickly reveal that they are a primary cause of them.
For that reason, you will never and I repeat NEVER see a Central banker, Bank CEO, or politician admit openly what is happening in the financial system. Even middle managers and lower level employees won’t talk about it because A) they don’t know the truth concerning their institutions or B) they could be fired for warning others.
Please take a few minutes to digest what I’m telling you here. You will not be warned of the risks to your wealth by anyone in a position of power in the political financial hierarchy (with the exception of folks like Ron Paul who are usually marginalized by the media).
Moreover, when the Crisis DOES hit, it will be much, much harder to get your money out.
Consider the recent regulations implemented by SEC to stop withdrawals from happening should another crisis occur.
The regulation is called Rules Provide Structural and Operational Reform to Address Run Risks in Money Market Funds. It sounds relatively innocuous until you get to the below quote:
Redemption Gates – Under the rules, if a money market fund’s level of weekly liquid assets falls below 30 percent, a money market fund’s board could in its discretion temporarily suspend redemptions (gate). To impose a gate, the board of directors would find that imposing a gate is in the money market fund’s best interests. A money market fund that imposes a gate would be required to lift that gate within 10 business days, although the board of directors could determine to lift the gate earlier. Money market funds would not be able to impose a gate for more than 10 business days in any 90-day period…
Also see…
Government Money Market Funds – Government money market funds would not be subject to the new fees and gates provisions. However, under the proposed rules, these funds could voluntarily opt into them, if previously disclosed to investors.
http://www.sec.gov/News/PressRelease/Detail/PressRelease/1370542347
In simple terms, if the system is ever under duress again, Money market funds can lock in capital (meaning you can’t get your money out) for up to 10 days. If the financial system was healthy and stable, there is no reason the regulators would be implementing this kind of reform.
As Zerohedge noted earlier today, the use of “gates” is spreading. A hedge fund just suspended redemptions… meaning investors cannot get their money out. Expect more and more of this to hit in the coming months as anyone who is has bet the farm on the system continuing to expand gets taken to the cleaners.
The solution, as it was in 2008, will not be to allow the defaults/ debt restructuring to occur. Instead, it will be focused on forcing investors to stay fully invested at whatever cost.
This is just the start of a much larger strategy of declaring War on Cash.
Indeed, we’ve uncovered a secret document outlining how the Fed plans to incinerate savings to force investors away from cash and into riskier assets.
We detail this paper and outline three investment strategies you can implement
right now to protect your capital from the Fed’s sinister plan in our Special Report
Survive the Fed’s War on Cash.
We are making 1,000 copies available for FREE the general public.
To pick up yours, swing by….
http://www.phoenixcapitalmarketing.com/cash.html
Best Regards
Phoenix Capital Research
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