Dec 16

Today’s News December 16, 2015

  • GOP Debate Post-Mortem: "Chaos" Trump, "Full Vagina" Fiorina, & "Thug-Life" Cruz Vs "Carpet-Bomb-'em" Rubio

    Despite the best efforts to "Le Pen" Trump out of the debate, he still managed to garner the highest votes among poll audiences with regard who 'won' the debate, focusing on killing ISIS family members, border walls, shutting down the internet, and fixing America's roads and bridges. Ben Carson's moment of silence was his first truthful statement in months. The comes the Cruz-Rubio-Paul-Kasich death-match of who can explain Sunni-Shia turmoil in the most confusing way (with 'coughing' Cruz calling himself the most determined "thug" and Rubio lashing out at Cruz's plans to carpet-bomb Syria). Jeb took a swing at Trump as the "chaos president" and missed. In sum, aside from an Iowa conservative radio host who endorsed Cruz proclaiming Fiorina went "full vagina," the GOP debate appeared more a dick-measuring competition as contestant after contestant lined up to seem more hawkish.

     

    And the winner is…

     

    To better understand the evening's tensions…

    *  *  *

    So we start with Ben Carson's moment of slience for San Bernardino…

    Quickly followed by Fiorina's opening statement, as the ex-Hewlett Packard CEO detailed overcoming adversity in her life during the remarks – "I have been tested. I have beaten breast cancer, I have buried a child," Fiorina said. "I started as a secretary, and I fought my way to the top of corporate America while being called every b-word in the book," which was described by a conservative Iowan radio host and Cruz endorser…

     

     

    Rand Paul took a swing at Trump's "close that internet thing"…

     

    And then Paul moved on to Rubio's mass surveillance state plans…

     

    Cruz vs Rubio got quite heated at times as they sparred over who was the bigger thug, warmonger, slayer of nations…

     

     

    A quick moment of slience for Lindsey Graham's campaign as he apologized to America for Donald Trump…

    After talking about the importance of destroying the Islamic State, Jeb Bush turned his fire on Mr. Trump: “Donald is great at the one-liners, but he’d be a chaos candidate and he’d be a chaos president.”

    Mr. Trump accused Mr. Bush of attacking only because his campaign has been “a total disaster” and “nobody cares.”

     

     

    John Harwood actually reflected something intelligent…

     

    *  *  *

    Finally a quick summary of the news…

     

    Summing it all up nicely…

  • Freight Shipments Plummet as Inventory Glut Bites

    The transportation sector just keeps getting worse. Even after today’s uptick, the Dow Jones Transportation Average is back where it was in April 2014, and down 18% from its peak a year ago. Within this transportation sector is freight, a gauge of the goods-based economy, which is having a rough time.

    In November, the number of freight shipments in North America plunged 5.1% from a year ago, according to the Cass Freight Index. It hit the worst level for any November since 2011.

    The index is based on $28 billion in freight transactions processed by Cass on behalf of its client base of “hundreds of large shippers,” Cass explains. It covers shipments, regardless of the mode of transportation, including shipments by truck and rail. It does not cover bulk commodities. Shippers include companies in consumer packaged goods, food, automotive, chemical, OEM, heavy equipment, and retail.

    This index of shipment volume has been lower year-over-year every month, with the exception of January and February, which makes for an increasingly awful looking year:

    US-freight-index-2015-11-shipments

    Reasons for these lousy shipment volumes are spread throughout the economy, including a litany of big retailers that have come forward with crummy results and disappointing projections.

    Yesterday it was Dallas-based Neiman Marcus, which caters to luxury shoppers. It reported its first quarterly sales decline since 2009, down 1.8% from a year ago, with same-store sales down 5.6%. It booked a loss and laid off 500 people. As so many times, there’s a private-equity angle to it: Subject of an LBO in 2005, it’s now owned by Ares Capital and the Canadian Pension Plan Investment Board. They were hoping to make a bundle via an IPO. But now the IPO has been put on hold.

    CEO Karen Katz blamed the oil and gas fiasco. Its customers in Texas run and own companies in the depressed energy sector, or they receive royalty checks. Alas… “Business conditions were quite challenging,” Katz said. She also blamed the “strong dollar” that prevented foreign tourists from splurging at its stores in the gateway cities Honolulu, San Francisco, Las Vegas, New York, Washington, and Miam.

    This follows the disastrous results at Men’s Wearhouse, which blamed its misbegotten foray into M&A. At the company it acquired, Jos. A Banks, same-store sales plunged 14.6%.

    Retailers are also lamenting their high inventories. But not just retailers. Total business inventories across the country have piled up to suffocating levels. Given lackluster sales, the crucial inventory-to-sales ratio, which measures inventory turnover, has reached 1.38, worse than it had been in October 2009 during the Financial Crisis:

    US-business-inventories-2004=2015-11

    And Cass issued a warning about this inventory glut:

    The Federal Reserve has held back from raising interest rates, but is expected to announce higher rates in December. This will negatively affect those companies holding record high inventories, as carrying costs will begin to rise more rapidly.

    So companies are trying to whittle down their inventories, and since it’s not happening via booming sales, they’re cutting orders. Shipment volume follows. And the Cass index for shipments, including rail and trucking, has been taking a drubbing in November – particularly among railroads. Cass:

    The Association of American Railroads reported a drop of 7.4% and 6.0% in carloads carried and intermodal [containers], respectively.

    The drop in intermodal reflects the high inventory levels faced by retailers and wholesalers and is more reflective of the goods included in the Cass Freight Shipments Index.

    Much of the carload loss is due to drops in bulk commodities such as coal, petroleum products and metallic ores—products not as well represented in the Cass data.

    Cass summarized the situation in the economy as it impacts transportation this way:

    Imports have slowed down considerably as retailers and wholesalers have ample supply for the holiday season. The November Institute for Supply Management’s Purchasing Manager’s Index (PMI) declined almost 3%, while production was down 7%, new orders off 7.6%, and order backlog increasing 1.2%. For the first time since August 2012, the PMI Production Index has dropped to a level indicating that it is contracting.

    And so the index for freight expenditures, which tracks the money spent on shipping products, plunged 9.1% in November from a year ago, on a combination of lower volumes and lower shipping rates. Except for January and February, the index has been lower year-over-year every month.

    US-freight-index-2015-11-expenditures

    And December is going to be even worse: “Expect freight to erode in December following established seasonal trends,” Cass said to soothe our frayed nerves.

    Retailers of all kinds in once booming Texas, not just luxury-focused Neiman Marcus, are getting hit as Oil Bust Contagion spreads into the broader economy. Read…  Retail Sales in Texas Plunge

  • You Want War? Russia Is Ready For War

    Authored by Pepe Escobar, originally posted at Sputnik News,

    Nobody needs to read Zbigniew “Grand Chessboard” Brzezinski’s 1997 opus to know US foreign policy revolves around one single overarching theme: prevent – by all means necessary – the emergence of a power, or powers, capable of constraining Washington’s unilateral swagger, not only in Eurasia but across the world.

    The Pentagon carries the same message embedded in newspeak: the Full Spectrum Dominance doctrine.

    Syria is leading all these assumptions to collapse like a house of cards. So no wonder in a Beltway under no visible chain of command – the Obama administration barely qualifies as lame duck – angst is the norm.

    The Pentagon is now engaged in a Vietnam-style escalation of boots on the ground across “Syraq”. 50 commandos are already in northern Syria “advising” the YPG Syrian Kurds as well as a few “moderate” Sunnis. Translation: telling them what Washington wants them to do. The official White House spin is that these commandos “support local forces” (Obama’s words) in cutting off supply lines leading to the fake “Caliphate” capital, Raqqa.

    Another 200 Special Forces sent to Iraq will soon follow, allegedly to “engage in direct combat” against the leadership of ISIS/ISIL/Daesh, which is now ensconced in Mosul.

    The US Air Force fighter jets

     
    These developments, billed as “efforts” to “partially re-engage in Iraq and Syria” are leading US Think Tankland to pen hilarious reports in search of “the perfect balance between wide-scale invasion and complete disengagement” – when everyone knows Washington will never disengage from the Middle East’s strategic oil wealth.

    All these American boots on the ground in theory should be coordinating, soon, with a new, spectacularly surrealist 34-country “Islamic” coalition (Iran was not invited), set up to fight ISIS/ISIL/Daesh by no less than the ideological matrix of all strands of Salafi-jihadism: Wahhabi Saudi Arabia.     

    Syria is now Coalition Central. There are at least four; the “4+1” (Russia, Syria, Iran, Iraq plus Hezbollah), which is actually fighting Daesh; the US-led coalition, a sort of mini NATO-GCC combo, but with the GCC doing nothing; the Russia-France direct military collaboration; and the new Saudi-led “Islamic” charade. They are pitted against an astonishing number of Salafi-jhadi coalitions and alliances of convenience that last from a few months to a few hours.

    And then there’s Turkey, which under Sultan Erdogan plays a vicious double game.  

    Sarajevo All Over Again?

    “Tense” does not even begin to describe the current Russia-Turkey geopolitical tension, which shows no sign of abating. The Empire of Chaos lavishly profits from it as a privileged spectator; as long as the tension lasts, prospects of Eurasia integration are hampered.

    Russian intel has certainly played all possible scenarios involving a  NATO Turkish army on the Turkish-Syrian border as well as the possibility of Ankara closing the Bosphorus and the Dardanelles for the Russian “Syria Express”. Erdogan may not be foolish enough to offer Russia yet another casus belli. But Moscow is taking no chances.

    NATO country flags wave outside NATO headquarters in Brussels on Tuesday July 28, 2015

     
    Russia has placed ships and submarines capable of launching nuclear missiles in case Turkey under the cover of NATO decides to strike out against the Russian position. President Putin has been clear; Russia will use nuclear weapons if necessary if conventional forces are threatened.

    If Ankara opts for a suicide mission of knocking out yet another Su-24, or Su-34, Russia will simply clear the airspace all across the border via the S-400s. If Ankara under the cover of NATO responds by launching the Turkish Army on Russian positions, Russia will use nuclear missiles, drawing NATO into war not only in Syria but potentially also in Europe. And this would include using nuclear missiles to keep Russian strategic use of the Bosphorus open.

    That’s how we can draw a parallel of Syria today as the equivalent of Sarajevo 1914.

    Since mid-2014 the Pentagon has run all manner of war games – as  many as 16 times, under different scenarios – pitting NATO against Russia. All scenarios were favorable to NATO. All simulations yielded the same victor: Russia.

    And that’s why Erdogan’s erratic behavior actually terrifies quite a few real players from Washington to Brussels.  

    Let Me Take You on a Missile Cruise

    The Pentagon is very much aware of the tremendous heavy metal Russia may unleash if provoked to the limit by someone like Erdogan. Let's roll out an abridged list. 

    Russia can use the mighty SS-18 – which NATO codenames “Satan”; each “Satan” carries 10 warheads, with a yield of 750 to 1000 kilotons each, enough to destroy an area the size of New York state.

    The Topol M ICBM is the world's fastest missile at 21 Mach (16,000 miles an hour); against it, there’s no defense. Launched from Moscow, it hits New York City in 18 minutes, and L.A. in 22.8 minutes.

    Russian submarines – as well as Chinese submarines – are able to launch offshore the US, striking coastal targets within a minute. Chinese submarines have surfaced next to US aircraft carriers undetected, and Russian submarines can do the same.

    S-400 Triumph (SA-21 Growler) air defense system
     

    The S-500 anti-missile system is capable of sealing Russia off from ICBMs and cruise missiles. (Moscow will only admit on the record that the S-500s will be rolled out in 2016; but the fact the S-400s will soon be delivered to China implies the S-500s may be already   operational.)

    The S-500 makes the Patriot missile look like a V-2 from WWII.

    Here, a former adviser to the US Chief of Naval Operations essentially goes on the record saying the whole US missile defense apparatus is worthless.

    Russia has a supersonic bomber fleet of Tupolev Tu-160s; they can take off from airbases deep in the heart of Russia, fly over the North Pole, launch nuclear-tipped cruise missiles from safe distances over the Atlantic, and return home to watch the whole thing on TV.

    Russia can cripple virtually every forward NATO base with tactical – or battlefield – small-yield nuclear weapons. It’s not by accident that Russia over the past few months tested NATO response times in multiple occasions.

    The Iskander missile travels at seven times the speed of sound with a range of 400 km. It’s deadly to airfields, logistics points and other stationary infrastructure along a broad war theatre, for instance in southern Turkey.

    NATO would need to knock out all these Iskanders. But then they would need to face the S-400s – or, worse, S-500s — which Russia can layer in defense zones in nearly every conceivable theater of war. Positioning the S-400s in Kaliningrad, for instance, would cripple all NATO air operations deep inside Europe.

    And presiding over military decisions, Russia privileges the use of Reflexive Control (RC). This is a tactic that aims to convey selected information to the enemy that forces him into making self-defeating decisions; a sort of virus influencing and controlling his decision-making process. Russia uses RC tactically, strategically and geopolitically. A young Vladimir Putin learned all there is to know about RC at the 401st KGB School and further on in his career as a KGB/FSB officer.

    All right, Erdogan and NATO; do you still wanna go to war?

     

  • 2015's Final Republican Presidential Nominee Debate – Live Feed

    In the fifth and final GOP presidential nominee debate deathmatch (from The Ventian in Vegas), all eyes will be on the Cruz and Rubio as they vie for 2nd place to The Teflon Don. It won't be all plain-sailing for Trump (who warned CNN about "fairness" and slammed FOX's Megyn Kelly in the pre-debate tweetfest), who expects "them all to be coming for me," but we suspect Ben Carson will be a little quieter. With the stakes highest so far (and Iowa caucuses just 7 weeks away) for some of the also-rans it is put-up-or-shut-up time which may mean more fireworks and spectacle as Americans are distracted from their fear of terror, stagnant income, pre-Fed last supper.

    As RedState.com notes, it’s obvious – the media and the pundits have been waiting for Donald Trump and Sen. Ted Cruz (R-TX) to blow each other up and leave neither man standing. They positively relish the idea of this fight. And it is an obvious one. Wolf Blitzer, at the CNN debate, will no doubt set up questions to draw out that fight.

    But don’t look there. That’s not the real fight.

    The real fight on stage tonight is going to be Sen. Ted Cruz (R-TX) vs. Sen. Marco Rubio (R-FL). Rubio needs to hold on to the establishment as Bush fades. Cruz needs to convince the establishment that he is the only guy who can take on Trump. Rubio needs conservatives to give him a second chance after his Gang of Eight deal. Cruz needs to hold conservatives and convince them his mastery of debate and willingness to fight overcomes Rubio’s communication skills.

     

    In the last debate, Cruz took a subtle dig at Rubio on sugar subsidies. Since then, Rubio’s Super PAC has gone after Cruz on national security. Rubio has suggesSen. Ted Cruz (R-TX) 100% would be weaker on national security.

     

    Cruz has gone after Rubio as a neocon internationalist who agreed with Barack Obama on Libya and Syria.

     

    That’s where the fight is going to be tonight. Cruz v. Trump will be gravy. Cruz v. Rubio will be the real fight.

     

    As Vox reports,

    This debate (the fifth for the GOP) will feature nine candidates on the primetime stage. Just five of those nine managed to qualify by topping 3.5 percent in an average of national polls — Donald Trump, Ted Cruz, Marco Rubio, Ben Carson, and Jeb Bush. However, CNN also took polling averages in Iowa and New Hampshire into account, so Chris Christie, John Kasich, Carly Fiorina, and Rand Paul also made the cut (though CNN had to bend its rules a bit to get Paul in). For Chris Christie, the main debate marks a moment of redemption. Christie was relegated to the so-called "undercard" debate in November after failing to qualify for the prime-time event.

     

    Four other candidates — Mike Huckabee, Lindsey Graham, Rick Santorum, and George Pataki — will be relegated to the earlier undercard debate.

     

    The other GOP candidate still running, Jim Gilmore, failed to qualify.

    Live Feed (due to start at 830ET).. (click image for link to CNN.com feed, no embed)

    *  *  *

    Despite all the excitement over Cruz's gains, let's get some context here…

     

    Caption Contest…

     

    Trump unleashed a torrent of tweets heading into the debate, taking swipes at everyone…

    *  *  *

    Rolling Stone released probably the best 'drinking game' – please imbibe responsibly – to make the debate bearable…The rules: 

    DRINK AFTER EVERY VIOLATION OF:

    1. The doctor's note rule: Self-explanatory. Drink after any riffing on Trump's latest stunt.

    2. The nuke 'em till they glow rule: Drink after any promise to "carpet bomb" the Middle East, or after any attempt to one-up Ted Cruz's recent comments about how, "I don't know if sand can glow in the dark, but we're going to find out."

    3. The Obama won't say "terrorism" rule: Candidate complains that the president is afraid to use the words "radical Islam" or "Islamic terrorism."

    4. The climate change denial rule: Complaint about the Paris climate change agreement. Shotgun a beer if it comes with a mention of how the nice local weather renders climate change talk meaningless.

    5. The War on Christmas rule: Mention of "red cups," nativity controversies, etc.

    6. The Reince Priebus rule: Mention of a brokered convention or use of the phrase "Let the people decide" in a discussion of RNC/Reince Priebus controversy. Double shot if the latter's name pronounced incorrectly.

    7. The George Lucas rule: Gratuitous mention of Star Wars. Double shot if it comes with an impersonation or a sound effect (e.g., Cruz does a Yoda voice while threatening ISIS).

    8. The I'm just a simple caveman rule: A candidate mentions that he/she is not a scientist, or generally derides higher education before proceeding to make a "common sense" point.

    9. The wet blanket rule: Attempt by Kasich to implore his fellow candidates to be more realistic, followed by boos/catcalls from the audience.

    10. The Hitler had some really good ideas rule: Salutary mention of Japanese internment, religious registries or other similar policies.

    11. The I don't just believe in the American dream, I'm a product of it rule: Anyone talks about how they are the son/daughter/husband/wife of a humble bartender/maid/tow truck driver/whatever because dreams and opportunity.

    12. The good guy with a gun rule: Self-explanatory.

    13. The empty God platitudes rule: An anti gun-control candidate extends "thoughts and prayers" to the victims of Paris, San Bernardino or whatever other mass shooting we'll have in the next ten minutes.

    14. The we're not racist rule: A candidate complains that people with "traditional values" are being accused of being bigots. Double shot if it's Rubio.

    15. The Carly, interrupted rule: Carly Fiorina interrupts someone and/or uses a bogus statistic. Double shot if it's that "73,000-page tax code" line she continues to send out there at every opportunity.

    THE EVERGREEN RULES

    ALWAYS drink, in every debate, when:

    16. Trump brags about how much money he makes.

    17. Anyone says, "I'm the only one on this stage who…"

    18. Someone says, "Any one of us onstage is better than Hillary Clinton…"

    19. The crowd breaks into uncomfortable applause at a racist/sexist statement.

    20. Any candidate evokes Nazis, the Gestapo, Neville Chamberlain, concentration camps, etc.

    21. Anyone force-feeds an Israel reference into a question where it doesn't belong. Also known as the Ann Coulter rule.

    22. Anyone pledges to "take our country back."

    23. The Jim Webb rule: Candidate complains about not getting enough time.

    24. Any candidate illustrates the virtue of one of his/her positions by pointing out how not PC it is.

    25. Someone invokes St. Reagan. Beware, people, this is an every time rule again.

    *  *  *

    Finally a quick summary of the news…

     

     

  • The Road To Galactic Serfdom – Libertarian Lessons From Star Wars

    Submitted by Dan Sanchez via AntiWar.com,

    o-STAR-WARS-FORCE-AWAKENS-facebook

    Star Wars: The Force Awakens hits theaters this week, continuing the cinematic saga of an interplanetary civilization’s struggles with galactic war and tyranny. It will be watched by millions whose own civilization is beset by global warfare driven by a planetary empire on the verge of descending into a militarized police state. So now would be a good time to review the lessons to be found in the first two Star Wars trilogies concerning the road to universal serfdom and how to keep off it.

    *  *  *

    The story of how the Galactic Empire arose is told in the prequels trilogy. The whole process is orchestrated from within the Galactic Republic by Palpatine, a seemingly benign politician who is secretly Darth Sidious, grand master of the Sith, a power hungry order of mystic warriors wielding the dark side of the Force. The Sith are a dark reflection of the Jedi Knights, who use the Force to protect life and in service to the Republic.

     

    Sidious is the “phantom menace” who, aided by his apprentice Darth Maul, covertly manipulates the galaxy’s republican government to progressively increase his own power, steadily advancing toward a total Sith coup. Just as with real life democracies, the Galactic Republic masks the machinations of the true wielders of power with the facade of “representative government” and drapes their seizures of still greater power with the sanctifying mantle of “popular sovereignty.” The Sith can be seen as an analogy for the deep state.

    Sidious’s implement of choice for accumulating power is war. His modus operandi is as follows. He first manufactures an interplanetary conflict and crisis, manipulating one side as Palpatine and commanding the other side as Sidious. He then engineers enhancements of his own power over the Republic, justifying them as regrettably necessary for decisively dealing with that crisis.

    In Episode 1, as Darth Sidious, he commands the Trade Federation to blockade and occupy the planet of Naboo. Then as Senator Palpatine, he convinces Naboo’s elected queen Padme Amidala to call for a vote of no confidence against the Republic’s Chancellor after he and the Galactic Senate fail to come to the aid of her people. This paves the way for Palpatine’s own election to the Chancellorship.

    In Episode 2, as Darth Sidious, he organizes a secessionist movement and directs the separatist Confederacy of Independent Systems to build a massive droid army. Meanwhile, he also oversees the spawning of a vast army of clone troopers, bio-engineered for docility.

     

     

    The Republic had been hesitant to raise an army to confront the secessionists. But after news breaks of the Confederacy’s droid build-up, the Senate grants Chancellor Palpatine emergency powers, enabling him to enlist and deploy the clone troopers as the Grand Army of the Republic. Palpatine assures the Senators:

    “It is with great reluctance that I have agreed to this calling. I love democracy! I love the Republic! Once this crisis has abated, I will lay down the powers you have given me.”

    In Episode 3, the fielding of the clone and droid armies has engulfed the galaxy in all-out war between the Confederacy and the Republic, with the Jedi leading the clone troopers into battle. This presents the opportunity for Sidious to issue Order 66, which activates the clones’ bio-programmed “Protocol 66,” under which they turn on and kill their Jedi commanders. (I will cover Anakin Skywalker’s role in all this later in the essay.)

    Finally, unhampered by the Jedi, wreathed with emergency powers, and backed by a perfectly obedient standing army, Palpatine declares himself Emperor with the following address to the Senate:

    “In order to ensure our security and continuing stability, the Republic will be reorganized into the first Galactic Empire, for a safe and secure society.”

    All the steps in the Dark Lord’s rise to total power were enabled by the crises of wars that he himself engineered. The overriding theme of the first trilogy is that the star wars engendered galactic tyranny. This is a perfectly realistic narrative motif, because it is merely an interstellar extrapolation of Randolph Bourne’s insight that war is the health of the State. The emergency-propelled rise of the Sith also fits with Robert Higgs’s broader insight that crisis is the health of Leviathan.

    Indeed, throughout history, rulers, regimes, and power cliques (just like Sidious and the Sith) have dragged their countries into wars in order to acquire, shore up, and enhance their power. This power play almost always works, because war activates in indoctrinated adherents of a State what Randolph Bourne called the “herd mind”: a sort of statist Protocol 66.

    Terrorized by the menaces of war, and aroused by its prizes, State citizens react like a spooked herd or a ravenous pack. They become as docile as sheep or dogs (or Sith-bred clones) to their shepherds and masters in government, swarming to their feet and granting them sweeping emergency authority, just as the war-spooked Galactic Senate repeatedly empowered Palpatine. They yield their liberties, even to the point of renouncing their individuality (like how the imperial troopers were all clones of a single man). Under the exigencies of war, the people, as Bourne put it:

    “…proceed to allow them­selves to be regimented, coerced, de­ranged in all the environments of their lives, and turned into a solid manufactory of destruction to­ward whatever other people may have, in the appointed scheme of things, come with­in the range of the Government’s disapprobation. The citizen throws off his contempt and indifference to Government, identifies himself with its purposes, revives all his military memories and symbols, and the State once more walks, an au­gust presence, through the imaginations of men.”

    As Higgs detailed, the expansions of state size and power that occur during a war or other emergency are generally scaled back after the crisis passes, but never all the way down to the pre-crisis level. Thus, the power of the state ratchets up with every war.

    This is why governments pursue war, and why war eventually leads to tyranny, and ultimately to totalitarianism.

    Empires are so enamored with the empowering effects of war, that they will often try to maximize the clash by, like Palpatine, deliberately provoking (or fabricating) attacks, arming future enemies, and aiding both sides in a conflict. Especially egregious in this regard has been the US empire.

    The casus belli of the Mexican-American War (the Thornton Affair), the Spanish-American War (the USS Maine), World War I (the Lusitania and the Zimmerman telegram), World War II (Pearl Harbor), and the Vietnam War (Gulf of Tonkin) all involved engineered conflicts, deliberate provocation and baiting, deception, or outright fabrication on the part of the US.

    The US armed the Soviets against the Nazis in the Second World War, then armed international jihadis against the Soviets in the Cold War, and is now devastating the Greater Middle East under the pretext of fighting international jihadis in the Terror War.

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    The US sold weapons of mass destruction (WMDs) to Saddam Hussein’s Iraq for use in invading Iran, while secretly selling arms to Iran at the same time.

    To provoke a crisis which led to the first war on Iraq, the US greenlit Saddam’s invasion of Kuwait over an oil rights dispute, just as Sidious greenlit the Trade Federation’s invasion of Naboo over a trade taxation dispute.

    After having sold WMDs to Saddam, the US invaded Iraq again years later over then non-existent WMDs, as well as non-existent ties to the international jihadi movement that the US first built up.

    And now the US is arming the new Iraq government to fight the jihadis of ISIS, while also arming the jihadis fighting alongside ISIS in Syria.

    And Washington has used every single war and crisis it has concocted to expand its global empire and justify the accumulation of greater power over its domestic subjects. Are you getting the picture yet? We are ruled by a power clique just as diabolical and ruthless as the Sith.

    *  *  *

    What especially accelerated Palpatine’s accumulation of autocratic power was general frustration over the fractious Galactic Senate’s inability to come to decisive agreement over how to deal with the Sith-generated crises. This was most fully expressed in an intimate interlude between Padme Amidala and the young Jedi apprentice Anakin Skywalker (who later becomes the evil Darth Vader), following a romantic romp through the countryside.

    ANAKIN: I don’t think the system works.

    PADME: How would you have it work?

    ANAKIN: We need a system where the politicians sit down and discuss the problems, agree what’s in the best interests of all the people, and then do it.

    PADME: That is exactly what we do. The trouble is that people don’t always agree. In fact, they hardly ever do.

    ANAKIN: Then they should be made to.

    PADME: By whom? Who’s going to make them? (…)

    ANAKIN: Someone wise.

    PADME: That sounds an awful lot like a dictatorship to me.

    ANAKIN: Well, if it works…

    Padme then decides that Anakin is teasing her, and, sitting in a meadow with the future Fuhrer, laughs it off. “You’re so bad!” she playfully chides him, as if to say, “Oh, Adolph…!”

    As F.A. Hayek explained in The Road to Serfdom, such an impulse toward dictatorship among those “impatient with the impotence of democracy,” as he put it, occurs frequently. He argued that it is a function of citizens giving their republics too expansive a mandate for addressing the ills of society through central planning. As Hayek put it:

    “…agreement that planning is necessary, together with the inability of democratic assemblies to produce a plan, will evoke stronger and stronger demands that the government or some single individual should be given powers to act on their own responsibility. The belief is becoming more and more widespread that, if things are to get done, the responsible authorities must be freed from the fetters of democratic procedure.”

    For example, Hayek argued that Weimar Germany’s embrace of planning paved the way for the rise of Adolph Hitler:

    “In Germany, even before Hitler came into power, the movement had already progressed much further. It is important to remember that for some time before 1933 Germany had reached a stage in which it had, in effect, had to be governed dictatorially. Nobody could then doubt that for the time being democracy had broken down… Hitler did not have to destroy democracy; he merely took advantage of the decay of democracy and at the critical moment obtained the support of many to whom, though they detested Hitler, he yet seemed the only man strong enough to get things done.”

    11282853_437392613107765_331622827_n

    When dictators come to power, it is generally because many in the public are clamoring for it, yearning for an Alexander who will cut the Gordian knot of parliamentary discord, and who will use unchecked power to finally deliver all the good things that they believe can only flow from the State. As Padme remarked upon Palpatine’s declaration of the Empire, “So this is how liberty dies: with thunderous applause.”

    All this is very disquieting when we reflect on our present political state of affairs. We ourselves are mired in war, crisis, and insecurity. Great swaths of the country are demanding more planning (whether escalation of the war on ISIS or a larger welfare state at home), and expressing frustration over the republic’s inability to decisively deliver on those demands. Moreover, every one of the leading Presidential candidates is a potential strongman.

    Trump preens as a “tough guy” and his ardent followers want him “make America great again,” with a strong, authoritarian hand. Trump, echoing Palpatine’s promise of a “safe and secure society”, foretells that:

    “…security is going to rule. […] And so we’re going to have to do certain things that were frankly unthinkable a year ago.”

    Then there is Marco Rubio, a loyal apprentice of the neocon Sith who parrots his masters in everything from his phraseology (“New American Century,” “Clash of Civilizations,” etc.) to his dedication to an ever-expanding Empire and ever-proliferating wars.

    And Ted Cruz would have loved to command his own Death Star, judging from his expressed enthusiasm for civilian casualties and dropping nukes.

    On the Democratic side, there is the Machiavellian Hillary Clinton who is almost as imperialistic and warlike as Rubio. Clinton is also eager to disarm the American public, which would place us in completely prostrate serfdom under the government’s stormtroopers in the military and militarized police departments.

    Then there is the avowed advocate of all-around economic planning, Bernie Sanders.

    In America we have the blessed freedom to select our flavor of dictator. We can choose where we want the coming totalitarianism to begin before spreading everywhere else: total war, a total police state, or total economic planning. “I love democracy! I love the Republic!”

    *  *  *

    The Jedi suspect that Anakin is the prophesied “chosen one” who will restore balance to the Force. Yet his turn to the dark side is also anticipated. When Anakin is brought before Yoda as a child, the Jedi Master senses much fear in the boy: specifically fear of losing his mother.

    “What has that got to do with anything?” Anakin objects. “Everything!” Yoda answers, “Fear is the path to the dark side. Fear leads to anger. Anger leads to hate. Hate leads to suffering.”

    This echoes the 12th century Muslim philosopher Ibn Rushd (Averroes), who wrote:

    “Ignorance leads to fear, fear leads to hate, and hate leads to violence. This is the equation.”

    Years later, after Anakin does turn, becoming Darth Vader, Yoda warns his son Luke Skywalker not to follow in Vader’s footsteps:

    “Yes, a Jedi’s strength flows from the Force. But beware of the dark side. Anger, fear, aggression; the dark side of the Force are they. Easily they flow, quick to join you in a fight. If once you start down the dark path, forever will it dominate your destiny, consume you it will, as it did [Darth Vader].”

    Yoda later clarifies that:

    “A Jedi uses the Force for knowledge and defense, never for attack.”

    Yoda’s references to “aggression” and “attack,” as opposed to “defense” invite a libertarian interpretation of what the dark side of the Force is. Indeed a fundamental libertarian concept is the “Non-Aggression Principle” (NAP). According to the NAP, violence is unjust (crosses over to the dark side) when it is aggression: that is, violence initiated against another. Violence, as Yoda would say, is only justified in defense against aggression (which, according to libertarians, includes violence to reclaim stolen property or restitution).

    What about the “path to the dark side” that Yoda spelled out? It is difficult to believe that anger and fear never serve a good function.

    However, if instead of “anger,” we stress Yoda’s and Ibn Rushd’s reference to “hate,” it makes more sense. We can define “hate” as anger that is so overwhelming that it leads one to commit aggression against the target of that anger, as well as to indiscriminately attack those lumped in with that target.

    Similarly, we might substitute “terror” for “fear,” defining “terror” as fear that is so overwhelming that it drives one into hate, and thus into aggression.

    Terror is the path to the dark side. Terror leads to hate. Hate leads to aggression. Aggression leads to suffering.

    Especially with these refinements, we can see Yoda’s warning about Anakin being vindicated throughout the prequels trilogy. The terror Anakin feels over losing his mother, which Yoda identifies in Episode 1, emerges again in Episode 2, as he begins having dreams about her suffering.

    Later, after his mother is killed by Tusken Raiders, the terrorized Anakin slips into hateful indiscriminate vengeance: into aggression, the dark side. As he later confesses to Padme, he massacres the entire camp of “Sand People”, including even innocent children and babies.

    With this massacre, Anakin starts down the “dark path,” and from then on it “dominates his destiny.” He takes another step down that path at the beginning of Episode 3, when he again yields to hate and executes a surrendered prisoner under the prodding of Palpatine.

    He also begins having premonitions of his beloved Padme suffering. And so terror of losing his mother is replaced by terror of losing his wife. This leads to his final turn, after Palpatine offers to teach Anakin how to use the dark side of the Force to stave off Padme’s death. After helping Palpatine kill a Jedi Knight, Anakin swears himself to the Sith, taking on the name Darth Vader. When his new master activates Protocol 66, Vader participates in that Night of Long Knives, even massacring young children in a Jedi temple school.

    Nonetheless, his terror of losing Padme ensures that he does lose her. Thinking she had turned against him, he lashes out using the Force and wounds her. Despondent over her husband’s dark turn, she soon after dies giving birth to Luke and his sister Leia. As Yoda warned, the path to the Dark Side only leads to suffering.

    Anakin then takes his station beside the new Emperor in the “benevolent” ironfisted dictatorship that he had dreamed of years ago.

    *  *  *

    Throughout the original Star Wars trilogy, Luke faces challenges similar to those of his father. In Episode 5, Yoda has misgivings about Luke as well, complaining that his new apprentice is too impatient and impetuous. But Luke assures Yoda, “I’m not afraid,” marking out the fundamental difference between himself and his father: freedom from terror.

    Yoda is dubious, especially when Luke, like his father, begins having his own premonitions about people close to him suffering: in his case, Leia and Han Solo. Terrified of losing his friends, Luke insists on breaking off his training with Yoda to go help them. Yoda worries that this is Luke’s own start down the same dark path that his father followed.

    And Luke indeed is faced with temptations to join the Dark Side, especially after learning he is Vader’s son, and upon his father’s invitation to help him rule the galaxy. But Luke rejects the offer, choosing to jump to his own possible death instead.

    Far from turning to the dark side, Luke is determined to turn his father away from it. To this end, he allows himself to be captured by the Empire in Episode 6. This leads to a duel with his father, during which Vader terrorizes Luke by threatening to turn Leia to the dark side. This drives the young Jedi into hate, causing him to temporarily lose control, and to grievously injure and incapacitate Vader.

    The Emperor is also present, and urges Luke to complete his turn to the dark side by striking his helpless father down:

    “Good! Your hate has made you powerful. Now, fulfill your destiny and take your father’s place at my side!”

    But Luke catches and calms himself, breaks the spell of terror and hate, casts his lightsaber away, and refuses to commit aggression against his father, a defeated opponent. He says:

    “Never. I’ll never turn to the Dark Side. You have failed, Your Highness. I am a Jedi, like my father before me.”

    Enraged by failure, the Emperor tries to kill Luke. Seeing his son about to be slain by his master, Anakin finally turns back against the dark side and against the Sith. In defense of his boy, he incurs mortal injury by hurling the Dark Lord into the Death Star’s reactor.

    As Anakin lay dying, his son pleads with him, “No, you’re coming with me. I won’t leave you here. I’ve got to save you!”

    His father answers, “You already have, Luke.”

    *  *  *

    The libertarian spin on the path to the dark side has many lessons for our country.

    As a result of decades of foreign wars and intervention, on 9/11, we were struck by terrorists and allowed ourselves to be stricken with terror. This terror drove us into irrational, broad-brush hatred toward Muslims in general. That hatred provided cover for a war of aggression in Iraq which has resulted in over a million dead, followed by over a decade of wreaking havoc throughout the Muslim world, which has left over four million dead. Having suffered the massacre of our innocents, like Anakin after the murder of his mother, we ourselves allowed for the massacre of innocents, and in far greater numbers.

    Shortly after 9/11, Vice President Dick Cheney said on television, “We also have to work, though, sort of the dark side, if you will.” And, stricken with terror and indulging in hate, America did embrace the dark side, accepting torture, indefinite detention, warrantless surveillance, assassination, perpetual illegal wars, and mass civilian casualties.

    Terror led to hate, hate led to aggression, and aggression has led to suffering, not only for the the direct victims of the wars, but for Westerners at home, as we find ourselves afflicted by blowback in the form of a refugee crisis and terrorist attacks.

    This blowback has, in turn, provoked a fresh bout of Islamophobic terror and hate, driving calls for still more aggression in the form of more foreign militancy as well as domestic oppression against Muslims. This too will only lead to suffering, both in the form of further blowback,and in the form of an oppressive militarized garrison state that will not stop at persecuting only Muslims. As Yoda warned: “If once you start down the dark path, forever will it dominate your destiny, consume you it will…”

    But it need not dominate our destiny literally forever. As difficult as it may be, we can always choose to turn away from the dark side.

    It will help if we recognize that our giving in to the dark side is precisely what the terrorists want. They are, like the Sith, striving to terrorize us into hatred and aggression. They want us to sink ourselves into military quagmires, where we can be “bled to bankruptcy,” as Osama bin Laden put it. They also want our indiscriminate violence to radicalize Muslims in order to boost their recruitment.

    Also like the Sith, the terrorists want to breed antagonism. As ISIS proclaimed in its own official magazine, the strategy of its terrorism is to polarize the whole world into two warring camps (Islamists and Crusaders) locked in a black-and-white clash of civilizations, with no “gray zone” in between. “If you’re not with me, then you’re my enemy,” said Anakin after he turned, echoing a sentiment expressed by President Bush, and explicitly seconded by Osama bin Laden. “Only a Sith deals in absolutes,” responded Anakin’s former master Obi Wan.

    We must also realize that the ultimate source of most of our terror and suffering is our own government. As discussed above, the Sith-like State accumulates power by making enemy menaces (terror), cultivating nationalistic furor (hatred), and instigating foreign wars (aggression).

    Indeed the very essence of the State is regularized aggression, which it terrorizes the populace into accepting as the only possible way of providing security. And the modern democratic State wins loyalty and revenue by stimulating mutual hatred and fear among its citizens, and then brokering the mutual aggression that results.

    The dark side is the health of the State. But it is the sickness of civilization.

    Luke Skywalker’s heroic victory was that he resisted terror, renounced hate, and rejected aggression. Inspired by his son’s example, Anakin finally turned back from the Dark Side, and so was redeemed.

    If we would but be similarly inspired, then America could be redeemed as well. And we would finally step off the dark path to global suffering and universal serfdom.

    May liberty, justice, and peace be with you. And enjoy Episode 7.

     

  • Which Corporations Own The White House

    The president and his top advisers have kept an open door for CEOs of Fortune 100 companies, keeping almost 1,000 appointments with them, a Reuters review of White House records shows. Of the hundreds of appointments listed, Obama himself was present at about half. As the corrupting hand of government intervention spreads, so CEOs and the White House have become allies in advocating for immigration reform, the Trans-Pacific Partnership trade deal and reauthorization for the Export-Import Bank. So who really owns The White House?

     

    And the winner is…

    "I do take a fair amount of grief from Republican colleagues who think that I've just like totally lost my mind," said Honeywell International Inc's David Cote, 63, the most frequent CEO visitor to Obama's White House, having turned up more than 50 times.

     

    Cote was part of a high-profile commission on the nation's debt in 2010 and serves on another advisory panel on technology and manufacturing. He said he thinks CEOs should not delegate their responsibility to help politicians understand business. "You've got to be able to talk about this stuff and have both sides understand the needs of the other," he said.

     

    Cote, a life-long Republican, said he doesn't always agree with Obama but enjoys talking with him, calling him "a very smart guy" who doesn't get enough credit for his work on the economy.

    Since the economic downturn of 2008, the critics of capitalism have redoubled their efforts to persuade the American people and many others around the world that the system of individual freedom and free enterprise has failed.

    The first observation to make is that many if not most of the social and economic misfortunes that are most frequently talked about are not the product of a “failed” free enterprise. The reason for this is that a consistently practiced free enterprise system no longer exists in the United States.

     

    …

     

    What we live under is a heavily regulated, managed and controlled interventionist-welfare state. The over 80,000 pages of the Federal Register, the volume that specifies and enumerates all the Federal regulations that are imposed on and to which all American businesses are expected to comply, is just one manifestation of the extent to which government has weaved a spider’s web of commands over the business community.

    As we detailed previously, the Austrian economist, Ludwig von Mises, described this twisted, corrupted, and politicized capitalism over 80 years ago, in 1932, in an essay on “The Myth of the Failure of Capitalism,” published shortly before the coming of Hitler and the Nazi movement to power.

    In such a politicized market economy, working for and serving “national” and “social” interests become the guiding principle of business decision-making.

     

    What all these examples and facts about lobbying activities, campaign funding and government-business partnerships highlight is the pervasive extent to which “capitalism” as it now exists in the United States or Europe – or in fact all other parts of the world – has nothing to do with free market, laissez-faire capitalism.

     

    …

     

    In a real free market, there is no place for politicians to offer privileges and favors, because there are none to sell. There is no motive or gain for special interest groups to spend huge sums of money in campaign contributions or lobbying expenses, because political benefits for some at others’ expense cannot be bought.

     

    Wasteful and corrupting “partnerships” between government and business enterprises cannot occur because political authority is restrained from any task other than the securing of each individual’s right to his life, liberty, and peacefully acquired property.

    As Ludwig von Mises said, the political and economic crises through which the world suffers is not the crisis or failure of the free market. No, it is the crisis and failure of the interventionist-welfare state, and its anti-free market capitalist ideology.

  • Grant Williams: The End Of The Road

    Submitted by Adam Taggart via PeakProsperity.com,

    Grant Williams returns this week to set the context for this week's FOMC meeting, where the Federal Reserve is widely expected to hike interest rates for the first time in nearly a decade. To say he is very skeptical of the Fed's ability to continue to control market forces much longer is a gross understatement:

    None of this has been tried before and, to me, that just demonstrates the dangers. Once you get into a situation like the central banks did in ’08 with this panicking — everyone calls it the Hotel California — you can’t get out. And, so incrementally, they have to keep doing something. Instead of stepping back and letting free markets and business cycles and forces of nature have their way and flush out all of the impurities in the system, this is what happens. And, yet, this time, for whatever reason, I think since post-Volker, Greenspan has basically started this ball rolling with this knee-jerk reaction to slash interest rates. And, you can kind of understand it, because everyone was still traumatized by the high inflation of the ‘70s. But, they started and they started down that road.

     

    And, if you look at a chart of interest rates in the U.S., you can see. It’s just, from 1980—I’ve marked two points on all my charts for presentations. One is the end of the gold standard, August 15, ’71, when Nixon closed the gold window. And, the next is peak interest rates in 1980. And, if you look at those two charts and you see what’s happened with interest rates since, they’ve been on a course to hit zero ever since.

     

    But, if you step back from that and you say forget the creeping nature of this and how we’ve gradually got here, try and parachute yourself in and look at the situation, and look at it through clear eyes, you'll say, “Hang on, we have negative nominal interest rates, and we have people queuing up to buy the debt of what are clearly bankrupt governments at negative interest rates.” It would take you no time at all to think, “Well, this is, this is ridiculous. Not only that, but this is the end of the road. It has to end here or near here.”

     

    And, so I think that’s where we are. I think we’ve reached the end of the road. That’s not to say the end of the road is a brick wall. We can be trying to turn the car around for a year, who knows, trying to find another way out of this thing. But, we’re there. I mean, believe it or not, we are there. And, so how this thing plays out, none of us know. But, I suspect that the tactics that are going to be employed are going to get more and more desperate, because they have to keep going now. They’re so far in, they have to keep going, and keeping going means doing more and more extraordinary things.

     

    It’s a relative game. There are people that have to be invested. And, so you can herd them by taking away the chance of investing into one thing, i.e., putting rates at zero so you can’t just put your money in cash or short-term Treasuries. By doing that, you know, psychologically, you’re going to herd them somewhere else, and that’s been into the stock market, it’s been into asset prices, which is fine. But, it’s not a temporary removal of that ability to put stock in cash. You have to keep that away from them, because if you give it back to them, if you give them back that option, it’s going to mean interest rates are at much higher levels, which is going to screw all the debt payments. They are going to run for the hills faster than you can imagine, because none of this stuff is what you would choose to invest in, all things being equal. You wouldn’t invest in the S&P where it is now, after the run it’s had. God knows you wouldn’t invest in government bonds where they are now. You might take a long hard look at asset prices and think, “Well, you know what, actually, I might buy some base commodities here, because they’ve been just completely slaughtered.” But, you certainly wouldn’t be investing in the two things that they need you to invest in, which are government bonds and equities.

     

    So, that’s the real problem. And, the fact that they realize that tells me that we are getting to the end of this road, because that credibility is not something they can maintain forever, particularly when they’ve boxed themselves in with negative interest rates.

    Click the play button below to listen to Chris' interview with Grant Williams (59m:06s)

  • Obama's Vendetta With Gun Makers Gets Personal: Smith & Wesson Shares Plunge After Call For SEC Investigation

    Last Friday, in the aftermath of the most recent mass shooting in San Bernardino and the latest attempt by Obama to impose further gun control measures, ostensibly by executive order, we pointed out the one thing, or rather person, who even the NYT begrudgingly admitted in an article on “What Drives Gun Sales” has been the primary driver of gun sales in the US: US president Barack Obama.

     

    The irony in all this, of course, was that just last Friday the stock price of Smith & Wesson hit an all time high on expectations gun sales are about to hit even greater all time highs in the coming weeks.

    Alas, as it turns out, Obama is not a fan of efficient market irony and instead of letting the chips on gun control fall where they may especially if it means record stock prices for the shareholders of SWHC and RGR, the president – in pulling a page straight out of the “US Government vs Exxon” in which the company will soon be prosecuted over its Global Warming denials as reported previously – has decided to take his vendetta with US gun makers to the next level and as the NYT reported overnight, “the New York City public advocate on Monday asked federal regulators to investigate whether the gun manufacturer Smith & Wesson had made adequate disclosures in its financial statements.“

    One would think that being in compliance with all existing SEC regulatory requirements would be sufficient, but when one is on Obama’s black list there are additional requirements for “adequate disclosure” one must follow, especially the ones that one does not know about because they appear only after the fact.

    The NYT continues:

    In an eight-page letter, the public advocate, Letitia James, said the Securities and Exchange Commission should examine whether Smith & Wesson misrepresented or omitted information about how often its products are involved in crimes and what it has done to keep its guns out of the hands of criminals.

    In the letter “public advocate” Letitia James says that “with the increase in mass shootings, public concern about the proliferation of firearms has animated a national dialogue about gun control measures, interstate gun trafficking, and whether gun manufacturers should take additional steps to ensure that their products do not end up in the hands of criminals,” the letter says. “Smith & Wesson knows that it is at risk of grave reputational harm.”

    It probably also did not know that the US government is capable of extortion when it does not get its way; it will be quite aware of that now.

    Ms. James’ punchline: “shareholders would want to know whether Smith & Wesson faced heightened regulatory scrutiny or significant litigation risk.”

    They would, especially now that the administration of the world’s biggest democracy is taking a “negotiating tactic” page right out of Stalinist Russia.

    To be sure, this is merely the latest escalation in Obama’s witch hunt against gunmakers, of which Lelita James has tasked herself with being the mouthpiece for the administration’s relentless attempt to crush the US gun industry.

    Ms. James is opening a new avenue in her fight against gun sellers and makers. Earlier this month, she called on TD Bank, a big lender, to stop financing Smith & Wesson. This summer, she convinced the New York City Employee Retirement System, the city’s largest pension fund, to explore divesting itself of its holdings of gun retailers like Walmart and Dick’s Sporting Goods.

    Smith & Wesson, which makes 50 percent of all the revolvers owned in the United States, did not respond to a request for comment, although we can imagine what it would say: “If Obama has determined that the best way to protect the nation against CIA-funded terrorist organizations is by a creeping nationalization of the gun industry, then so be it.”

    Finally, if it was Obama’s intention to force the shareholders of Smith & Wesson into selling their shares from record high levels, he succeeded, if only for the time being.

  • Majority Of Millennials Have Under $1,000 In Savings

    Millennials are projected to number 75.3 million for 2015, surpassing a projected 74.9 million for Baby Boomers. The Millennials will therefore comprise a greater percentage of the population than Baby Boomers for the first time. To gain insight into the saving habits of Millennials, we recently performed a survey of those from the ages of 18 to 34. We received 2,585 responses to our survey. The results of our survey found that over 50% of Millennials have less than $1,000 in savings. This would indicate that most millennials do not have a cushion to fall back on in case of an emergency. The rest of our findings can be analyzed with the visualizations below:

    For those surveyed, we found that:

    • 51.8% of Millennials have less than $1,000 in savings.

    • 18% of Millennials have savings of $1,000 to $5,000.

    • 7.3% of Millennials have savings of $5,000 to $10,000.

    • 6.4% of Millennials have savings of $10,000 to $20,000.

    • 16.5% of Millennials have savings of more than $20,000.

    Millennials Savings by Income Group

    Breaking it down by the income of the survey participant, we unsurprisingly found that the level of income appeared to have a correlation with the amount of savings. We found that:

    • 56.3% of Millennials earning $25,000 to $49,000 had less than $1,000 in savings. This compared with 31.2% of those earning $75,000 to $99,999.

    • Among those earning $100,000 to $149,000, 14.8% had savings of $5,000 to $10,000

    • 14.3% of those with savings of $10,000 to $20,000 were those Millennials with incomes in excess of $150,000, the highest percentage in that range of savings.

    • Around 50% of those with incomes in excess of $150,000 had savings of more than $20,000.

    Millennials Savings by Gender Group

    We also found differences in the amount of savings between male and female respondents:

    • 56.7% of females have less than $1,000 in savings as compared to 46.5% for males.

    • On the upper end of the savings scale, 21.5% of males have more than $20,000 saved versus only 11.9% for females.

    • For savings in the range of $1,000 to $20,000, the percentages between male and females respondents were roughly the same.

    Millennials Savings by Age Group

    For a breakdown of savings by age groups we found:

    • 57.6% of respondents from the ages of 18 to 24 have less than $1,000 in savings. This compared to 47.1% of those from the ages of 25 to 34.

    • For savings of $1,000 to $5,000, 19.6% of respondents from 18 to 24 had savings in this range, compared to 16.6% of those from 25 to 34.

    • On the upper end of the scale, 11.7% of those from 18 to 24 had savings in excess of $20,000, compared with 20.5% of those from 25 to 34.

    Surprisingly, it appears that Millennials may be saving more money than other those in other age groups. Still, their financial behavior remains a mystery even to Janet Yellen, the head of the Federal Reserve. Since Millennials are growing as a percentage of the population, their savings and spending habits will increasingly have a major impact on the overall economy.

    Source: HowMuch.net

  • The Billionaire's Pick: How Marco Rubio Became The Preferred Puppet Of GOP Oligarchs

    Submitted by Mike Krieger via Liberty Blitzkrieg blog,

    As much as I dislike all the leading candidates for President of these United States, there’s no one on the Republican side who disgusts me more than Marco Rubio.

    As concerning and hateful as so much of Trump’s commentary is, we can at least be sure he speaks from his own twisted mind. This is precisely why he appeals to so many people in this day and age of completely captured politicians. People like the fact that every word out of his mouth hasn’t been carefully placed there by some billionaire patron.

    On the exact opposite end of that spectrum we find Marco Rubio. A man so incapable of free-thought, he becomes the ideal target for billionaires looking to craft the perfect puppet. Forget Jeb Bush, Marco Rubio is now the establishment GOP’s pick, and they will do everything in their power to get him the nomination.

    There are three billionaire oligarchs in particular who seem to really love Rubio. They are Sheldon Adelson, Paul Singer and Ken Griffin. Let’s look at the evidence so far.

    Although Adelson hasn’t officially endorsed Rubio, it’s likely just a matter of time. See the following excerpt from yesterday’s Miami Herald:

    As GOP presidential candidates take the debate stage Tuesday at an extravagant Las Vegas hotel, they will once again compete for voters in an increasingly unpredictable race. But they are also vying for the attention of the man who owns the building — and no candidate has worked harder than Florida’s Marco Rubio.

     

    The U.S. senator has avidly courted casino magnate Sheldon Adelson, sitting down with him privately numerous times, including a dinner in Washington weeks before launching his campaign in April, and checking in regularly by phone to talk about Israel and the campaign.

     

    All told, Adelson and his Israeli-born wife spent $93 million that cycle [2008], the No. 1 individual donors, by far.

     

    This time, Adelson, whose worth is valued at somewhere between $20 billion and $30 billion, reportedly wants to throw his weight behind a more electable candidate and he’s prepared to spend even more. “I don’t cry when I lose,” he told the Wall Street Journal in 2012. “There’s always a new hand coming up.”

     

    Rubio has benefited from an outside group that has run TV ads featuring his hawkish foreign policy views, including a vow to tear up the Iran nuclear deal, which Adelson loathes. Rubio is also backing legislation Adelson is pushing to crush an expansion of online gambling, which threatens his global casino empire.

     

    Much of Rubio’s supposed favor has been conveyed by people who are close to Adelson, not Adelson himself, who rarely talks to the media.

     

    Adelson is a critic of unions but moderate on social issues and supports stem-cell research and immigration reform.

     

    Adelson does have business interests, and earlier this year Rubio attracted attention when he signed onto a bill that Adelson is trying to get through Congress that aims to curtail online gambling in states, a threat to his casino empire.

     

    Though Rubio has talked about states’ rights and avoiding picking “winners and losers,” he has attributed his support for the bill to a feeling that the Internet has fewer safeguards to protect people from fraud and addiction.

     

    “Rubio calls and says, ‘Hey, did you see this speech? Did you see my floor statement on Iran? What do you think I should do about this issue?’ ” a September New York magazine story quoted an unnamed Adelson friend as saying. “It’s impressive. Rubio is persistent.”

    For more on Adelson, see:

    Sheldon Adelson – The Dangerous American Oligarch Behind Benjamin Netanyahu

    Inside the Mind of an Oligarch – Sheldon Adelson Proclaims “I Don’t Like Journalism”

    Moving along, Rubio already has the official support of hedge fund billionaire Paul Singer. CNBC reports:

    Marco Rubio got some great news on with backing from influential hedge fund billionaire Paul Singer, who was heavily courted by multiple GOP presidential candidates, including former Florida Gov. Jeb Bush.

     

    But Singer’s backing — while a huge positive for Rubio in the money race — does not come without some risks for the Florida senator. Singer is distrusted in the conservative base of the GOP both for his support of same-sex marriage and his support of Rubio’s immigration reform efforts in the Senate. According to a person close to Singer, the hedge fund billionaire gave $100,000 to support immigration reform, which the right widely regards as “amnesty” for undocumented immigrants.

     

    Singer’s backing encapsulates a major potential problem for the Rubio candidacy. The senator wants and needs the vast piles of money the GOP’s Wall Street establishment is capable of pushing his way. Nobody organizes and directs that money better than Singer.

    But there’s far more to Singer’s support than ideology. From the Huffington Post:

    All that is music to Singer’s ears, but Rubio’s “work on the Senate Foreign Relations Committee” is about something else altogether: his political support for Singer’s efforts to drain more than $1.5 billion dollars from Argentina in payments on old bonds that lost most of their value after the country defaulted in 2001.

     

    Singer’s Elliott Management bought that debt several years ago for less than $50 million, and then successfully sued in U.S. court to demand full recovery of the face amount — in the face of opposition from the Obama administration, most other bondholders, and, above all, Argentina’s government, led by President Cristina Fernandez de Kirchner.

     

    Last year, another member of Congress got in on the act: Senator Marco Rubio. While grilling President Obama’s nominee as U.S. ambassador to Argentina, Rubio complained that Buenos Aires “doesn’t pay bondholders, doesn’t work with our security operations… These aren’t the actions of an ally.”

     

    This May, Rubio introduced a resolution in the Senate suggesting that Kirchner conspiried to “cover up Iranian involvement in the 1994 terrorist bombing.” Rubio declared that the issues in the case “extend well beyond Argentina and involve the international community, and more importantly, U.S. national security.”

     

    As Eli Clifton noted, “It turns out that Singer’s hedge fund, Elliott Management, was Rubio’s second largest source of campaign contributions between 2009 and 2014, providing the presidential hopeful with $122,620, according to the nonpartisan Center for Responsive Politics.”

    Next up, we have the billionaire CEO of hedge fund Citadel, Ken Griffin, also thought to be the richest man in Illinois. He recently endorsed Rubio. From CNBC:

    Ken Griffin, the billionaire hedge-fund manager who has become a major Republican Party donor in recent years, is throwing his support behind Florida Sen. Marco Rubio for president.

     

    “I’m really excited to be supporting Marco Rubio,” Griffin, who is the founder and chief executive of the Chicago firm Citadel, said in an exclusive interview with CNBC. “He will be the next president of the United States.”

     

    With a net worth estimated by Forbes to be $7 billion, Griffin is thought to be the richest person in Illinois, so depending on the level of financial support he provides, he could be crucial to a Rubio candidacy. In 2014, for instance, Griffin helped secure a gubernatorial victory for private-equity executive Bruce Rauner in Illinois by contributing $5.5 million and reportedly offering the use of his private plane.

     

    In the telephone interview Thursday, Griffin said he would play an active role in raising money for Rubio from his own network of associates. He also said he would contribute “several million dollars” to Rubio’s PAC starting “imminently.”

    Which brings us to Rubio’s latest squirmy tactic, in which he sacrifices individual choice in favor of protecting mega corporations. From the Intercept:

    Rubio, who is raising campaign cash from the telecom industry for his presidential campaign, fired off a letter to the Federal Communications Commission asking the agency to allow states to block municipal broadband services.

     

    The letter was the latest salvo in a long-running effort by the major telecom companies to outlaw municipal broadband programs that have taken off in cities such as Lafayette, Louisiana, and Chattanooga, Tennessee, because they pose a threat to a business model that calls for slow, expensive internet access without competition.

     

    In Chattanooga, for instance, city officials set up a service known as “The Gig,” a municipal broadband network that provides data transfers at one gigabit per second for less than $70 a month — a rate that is 50 times faster than the average speed American customers have available through private broadband networks.

     

    AT&T, Cox Communications, Comcast, and other broadband providers, fearing competition, have used their influence in state government to make an end-run around local municipalities. Through surrogates like the American Legislative Exchange Council, the industry gets states to pass laws that ban municipal broadband networks, despite the obvious benefits to both the municipalities and their residents.

     

    That’s why the FCC has become involved. The agency stepped in to prevent states from crushing municipal broadband and released a rule this year that allows local cities to make the decision on their own.

     

    As a result, telecom companies are furiously lobbying the FCC, litigating the rule in court, and leaning on GOP lawmakers to pressure the agency to back down.

    Naturally, Marco Rubio is leading the charge.

    Personally, I don’t think Rubio is even capable of all that much independent thought in the first place, but even if he was, the guy will do anything for campaign money. If you tried to create the perfect puppet in a test-tube, what would likely emerge is something very close to Marco Rubio. A man who consistently talks about small government and free markets, but who will fight to protect cronyism and oligarchy whenever somebody hangs a fresh dollar bill in front of his face. And all the smartest GOP billionaires know it.

  • A Pessimists' Guide To 2016: When Everything That Can Go Wrong, Does Go Wrong

    There’s a lot to be worried about going into 2016 both in terms of financial markets and in terms of geopolitical concerns. 

    We outlined the risks that pervade capital markets earlier today on the way to noting that the sellside penguin brigade seems to believe that somehow, nothing can derail the market’s momentum going forward. Here are the potential landmines investors face going into the new year:

    • soaring junk bond redemptions; 
    • rising investment grade (and high yield) yields pressuring corporate buybacks; 
    • record corporate leverage and sliding cash flows; 
    • Chinese devaluation back with a vengeance; 
    • capital outflows from EM accelerating as dollar strength returns; 
    • corporate profits and revenues in recession; 
    • CEOs most pessimistic since 2012, 
    • oh and the Fed’s first rate hike in 9 years expected to soak up as much as $800 billion in excess liquidity

    As ominous as all of that most assuredly is, the geopolitical outlook is even scarier. Here’s a rundown of some of the key issues politicians will need to grapple with in 2016:

    • Syria’s seemingly intractable civil war
    • the still simmering conflict in Ukraine
    • Brazil’s political crisis which threatens to keep one of the world’s most important emerging markets mired in a stagflationary nightmare
    • a migrant crisis that threatens to tear Europe apart at the seams
    • the resurgence of the far left and far right as voters lose faith in the political status quo

    In fact, we’ve already seen quite a few black swan landings in the past several months. Here’s our black swan map (click the image to read the background):

    Those who frequent these pages likely recall that both SocGen and Citi were out recently with their take on the risks that lie ahead (here and here). We encourage you to review their respective analyses in their entirety, but below, find two graphics which summarize a few key points.

    From Citi:

    From SocGen:

    For those who can’t get enough black swans, we present excerpts from a new infographic put together by Bloomberg, who outlines 10 “worst case scenarios” for 2016 as dreamed up by “dozens of former and current diplomats, geopolitical strategists, security consultants, and economists” (“Scenario #3 is priceless): 

    *  *  *

    Scenario #1: Oil climbs to $100 barrel

    Scenario #2: The UK leaves the EU

    Scenario #3: Banks hit by cyber attack

    Scenario #4: The EU crumbles over anti-migration fears

    Scenario #5: China’s economy falls, military rises

    For the entire list, including “Putin sidelines America,” and “Trump wins the White House,” see the full infographic here.

  • ISIS Twitter Handles Traced To UK Government By Hackers

    There’s no shortage of speculation about the possible role the West plays in funding, arming, and otherwise assisting Islamic State. 

    The theories range from the outright conspiratorial (the CIA created and to this day supports the group) to the probable (the US and its allies saw the establishment of a Salafist principality in Syria as a potentially destabilizing event for the Assad government and so initially encouraged Islamic State’s rise, only to face the worst case of blowback the world has ever known). 

    Recent revelations about Turkey’s role in facilitating Islamic State’s 45,000 b/d illicit oil trade have only added fuel to the fire and little by little, the Western public is starting to wake up to the fact that ISIS is more than the progeny of Abu-Mus’ab al-Zarqawi – it’s an entity that enjoys a great degree of state sponsorship.

    The question is this: which states ultimately participate in the conspiracy?

    One way to track down possible collaborators would be to go unit by unit through the network of regional affiliates that comprise Islamic State’s vast propaganda machine:

    The group should have a sizeable digital footprint given how active its followers are on Twitter and given the fact that ISIS distributes some 40 pieces of propaganda each day in various formats, most of which is disseminated on the web. 

    With that in mind, we bring you an interesting story from The Mirror who reports that “a number of Islamic State supporters’ social media accounts are being run from internet addresses linked to the UK Department of Work and Pensions.”

    “A group of four young computer experts who call themselves VandaSec have unearthed evidence indicating that at least three ISIS-supporting accounts can be traced back to the DWP’s London offices,” the paper says, adding that “at first glance, the IP addresses seem to be based in Saudi Arabia, but upon further inspection using specialist tools they appeared to link back to the DWP.”

    The Mirror did its own investigating and found that the IP addresses in question were sold by the British government as part of a larger deal to two Saudi Arabian firms.

    “After the sale completed in October of this year, they were used by extremists to spread their message of hate,” the paper concludes.

    Asked why the addresses still pointed back to the British government (which, you’re reminded, is bombing the ISIS home office in Raqqa), an “expert” told The Mirror that the “records of the addresses had not yet been fully updated.”

    As for the UK government, here’s the official line: 

    “The government owns millions of unused IP addresses which we are selling to get a good return for hardworking taxpayers.

     

    “We have sold a number of these addresses to telecoms companies both in the UK and internationally to allow their customers to connect to the internet.

     

    “We think carefully about which companies we sell addresses to, but how their customers use this internet connection is beyond our control.”

    An article that appeared on Medium yesterday lumps VandaSec in with several other hacker groups who have answered Anonymous’ call to wage cyber war on Baghdadi’s caliphate. “Operation ISIS (OpISIS) is a project, launched by Anonymous hacktivists, for the purpose of countering terrorist activities online,” Canidce Lanier writes. “Over time, there have been various Anonymous factions involved in OpISIS, including GhostSec, Binary Sec, VandaSec and CtrlSec.”

    For the punchline, we go to Huffington Post:

    UK security minister John Hayes has said he is “grateful” for the actions of hackers including Anonymous who have targeted Islamic State.

     

    The minister was asked by Keith Vaz, the chairman of the committee. “A lot of radicalisation happens online. Are you grateful from the support you receive from online activist groups that seek to take down the Twitter accounts of Daesh supporters?

     

    Hayes told the MPs the activitiy of radical Isamist groups online was “immense”. He added: “I am grateful for any of those who are engaged in the battle against this kind of wickedness.”

    That was three weeks ago. We wonder if Hayes is still “grateful.”

  • Which President Has Received The Most "Charity" From The Fed?

    Submitted by Roger Thomas via Valuewalk.com,

    If you’re an observer of the political aspect of the Fed policy, you’re likely aware that central bankers like to stay out of the spotlight.  Spotlight creates political pressure, something Fed technocrats publicly dislike.

    With this thought in mind, here’s a look at the federal funds rate overlaid with politics.

    Question – Before going further, which president would you guess has received the most charity from the Federal Reserve?  Meaning, after adjusting for inflation and employment growth (the two factors that theoretically determine the federal funds target interest rate), which president has experienced a very charitable Fed (i.e. keeps interest rates abnormally lower than what the inflation rate and employment growth would predict) and which presidents experienced a tough-willed Fed? 

    Another way of saying it is – Which presidents needed the Fed’s help and which presidents didn’t?

    Here’s a look.

    The Federal Funds Rate

    First, a look at the federal funds target rate.  The black lines represent periods when the rate was declining or steady.  The red lines are periods when the Fed was raising rates.

    Overall, the target rate generally declined for the first half of the 1980s and then rose to end the 1980s.  In the early 1990s, the Fed rate declined, bottoming out in 1994 before the Federal Reserve started raising rates again.  The early 2000s saw the Fed lower rates in response to the collapse of the technology bubble, and then raise rates in an attempt to deal with a global housing market bubble.  Since the bursting of the housing bubble and the near collapse of the global financial system, the Fed has kept rates near 0%.

    The last time the Federal Reserve raised the federal funds target rate was in 2006.

    Federal Funds Target Rate The Fed

    Federal Funds Rate with Presidents

    Next, here’s a look at the federal funds rate by president.

    Overall, it’s difficult to see any political cycle, likely because two important data points are missing from the graph.  The two points are the inflation rate and the employment growth picture.

    As John Taylor pointed out more than two decades ago, the Fed’s interest rate can be approximated by movements in the inflation rate and output against its long-run trend.

    So, to see which presidents the Federal Reserve thought needed the most help, one would need to adjust the actual federal funds rate for inflation and output conditions.  This would give an idea of which presidents the Federal Reserve thought (thinks) needed help.

     

    Federal Funds Rate by President, Color Represents History The Fed

    A Look at the Charitable Fed

    With the previous discussion as the background, take one last guess at which president you think the Federal Reserve was most charitable to.  Was it Bush I?  Perhaps Clinton?  Reagan?

    Which president needed the most help?

    Here’s the results.

    (As a note on methodology for technicians, the Taylor rule presented here uses employment growth as a proxy for output, with 2% employment growth as the long-term trend.  Both components of the Taylor rule are equally weighted.)

    Interestingly, the Fed has been most charitable to Mr. Obama.  During his tenure, the Fed has kept interest rates lower by an amazing 4%.

    Other the other end, the Fed’s least preferred presidents were Reagan and Bush II.  Both presidents saw a Fed much tougher than what inflation and employment would predict.

    Average Taylor Rule Less the Actual Federal Funds Target Rate The Fed

    The Fed  Conclusion

    In connecting Federal Reserve interest rate policy since the 1950s with inflation and employment conditions, some interesting results materialize.

    Of the interesting findings is that the Fed has presidents it wants to be tough on and presidents it likes to show charity to.

    In looking at the details,of the past 11 presidents, the Fed has shown the most charity to the sitting president, Mr. Obama.

    The charity shown during Obama’s administration is astounding.  When adjusting for inflation and employment growth, the Fed has kept to federal funds rate almost 4% below where it should be (based on a forked-Taylor rule).

    One of these days Mr. Obama ought to publicly thank Mr. Bernanke and  Ms. Yellen for their incredible generosity.  He needed the help.

    On the other end, the Fed was toughest on Ronald Reagan and Bush I.  They apparently didn’t need the Fed’s help.

    Overall, a fascinating view of Federal Reserve policy and its connection with politics.

  • The Unexpected Explanation How "That Ford Truck" Ended Up In ISIS Hands

    Almost exactly a year ago, the media world was abuzz when as we reported then, a picture posted by Ansar al-Din Front, an Islamic extremist brigade, and which promptly went viral showed a Ford F250 truck with a “Mark-1 Plumbing” decal on the door and a militant standing in the bed firing the anti-aircraft gun.

     

    And while most moved on quickly from this story, for one person the picture had a dramatic and scarring effect: the owner of said Mark-1 Plumbing company, a Texan by the name of Mark Oberholtzer, who as many know by now, is suing a Texas Ford dealership (Charlie Thomas Gord) for more than $1 million in financial losses and damages to his company’s reputation, as a result of this pickup truck which he once owned, ending up with Islamic militants fighting in Syria’s civil war.

    As CNN summarizes, “all Mark Oberholtzer wanted to do was upgrade his ride. What he got instead was a world of trouble from half a world away.”

    “By the end of the day, Mark-1’s office, Mark-1’s business phone, and Mark’s personal cell had received over 1,000 phone calls from around the nation,” Oberholtzer’s lawyer wrote in the lawsuit, filed December 9 in Harris County, Texas. “These phone calls were in large part harassing and contained countless threats of violence, property harm, injury and even death.”

    Oberholtzer said this wouldn’t have happened if the dealership had just removed the decals before the truck was resold, as he had demanded, thus serving as the basis for his lawsuit (attached below).

    But while we commiserate with Mr. Oberholzer, and wish him prompt restitution of damages as a result of unnecessary harassment, a far more important question is just how did Mark’s 2005 Ford F250 Super Duty end up in under the control of the Islamic State.

    The answer would be critical, as it will provide a factual, tracable answer how it is that ISIS is if not funded (we know already revealed a critical part of that story), then supplied with equipment and perhaps weapons.

    The answer is stunning.

    This is what the plaintiff states in his lawsuit:

    According to a CARFAX Vehicle History Report (see Exhibit B), the vehicle was listed as a dealer vehicle sold at a Texas auto auction on November 11, 2013. On December 18, 2013 the vehicle was exported from Houston, Texas and imported to Mersin, Turkey.

    And here is the proof straight from CARFAX, provided in Exhibit B of Oberholzer’s lawsuit:

     

    And the transaction history, with the relevant final clue highlighted:

     

    Presenting Mersin, Turkey, a stone’s throw from the infamous port of Ceyhan and about a hundred miles from the territory of the Islamic State:

     

    Here is what happened:

    • On October 23, 2013, Mark Oberholtzer entered into a transaction with Charlie Thomas Ford, in which he traded-in his old 2005 Ford F-250 pickup truck for a newer 2012 Ford F-250 pickup truck.
    • Promptly thereafter, the vehicle was listed as a dealer vehicle sold at a Texas auto auction on November 11, 2013
    • Less than a month later, on December 18, 2013 the vehicle was exported from Houston, Texas and imported to Mersin, Turkey.
    • Less than a year later it was in the documented possession of the Islamic State.

    So once again the “missing link” supplying ISIS emerges as none other than Turkey.

    For those to whom the Turkey-ISIS connection comes as a surprise, we urge you to reread:

    And while NATO-member Turkey supplying ISIS with funding, supplies, weapons or equipment is hardly groundbreaking news, the Ford “clue” poses new and important questions, such as:

    • who is the Turkish party that ordered and paid for the Ford truck’s transfer to Turkey, and subsequently received compensation from the Islamic State in the subsequent resale?
    • which is the US party which transacts with Turkish counterparts, who ultimately ship US products to Islamic State fighters?
    • is the US party aware that its Turkish counterparty has dealings with ISIS
    • what is the role of the US government in all of this, because it would be surprising that an administration that has sworn it would crack down on all outside assistance to the Islamic State would be unaware that “made in the USA” trucks ended up in the Islamic State by way of its faitful NATO ally, Turkey.
    • how many other such vehicles sold  in the US and exported to Turkey, have  made their way to the Islamic State

    We are confident that it will be relatively easy for any aspiring reporter to track down the US-based exporter of the Ford truck (and thus recipient of Turkish funds), just as it will be facile to uncover who was the Turkish buyer who signed the receipt invoice in Mersin, Turkey. What may be more difficult to uncover is whether the governments of the US and Turkey, respectively, were or are appraised about transactions such as this one, and if not, then why not?

    We hope to be able to answer as many of the above as possible in the very near future.

    The full Oberholtzer vs Charlie Thomas Ford lawsuit is below.

  • Foreigners Sell A Record $55.2 Billion In US Treasuries In October

    After several months of significant reserves liquidations by China (specifically by its Euroclear proxy “Belgium”) which tracked the drop in China’s reserves practically tick for tick, in October Chinese+Belgian holdings were virtually unchanged according to the latest TIC data, as China moderated its defense of its sliding currency. Of course, putting this in context still shows a China which has sold $600 billion of US paper since 2014, as this website was first to note over half a year ago.

     

    And while we expect a prompt resumption of Treasury selling in the coming months following China’s recent aggressive devaluation of its currency, what was more notable in today’s TIC data was the consolidated total change of all foreign US Treasury holdings.

    As shown in the chart below, following an increase of $17.4 billion in September, foreign net sales of Treasuries hit an all time high of $55.2 billion, surpassing the previous record of $55.0 billion set in January. In absolute terms, October’s total foreign holdings by major holders declined to $6,046.3 trillion the lowest since the summer of 2014.

     

    What is the reason? There are two possible explanations, the first being that foreigners are unloading US paper (ostensibly to domestic accounts) ahead of what they perceive an imminent Fed rate hike which would pressure prices lower, or more likely, the ongoing surge in the dollar and collapse in commodity prices continues to pressures foreign reserve managers to liquidate US  Treasury holdings as they scramble to satisfy surging dollar demand domestically and unable to obtain this much needed USD-denominated funding, are selling what US assets they have.

    Should this selling continue or accelerate in the coming months and if it has an adverse impact on TSY yields, it may also force the Fed’s tightening hand if, as some expect, the liquidation of foreign reserves becomes a self-fulfilling prophecy and leads to a material drop in Treasury prices.

    Source: Treasury International Capital

  • Denmark To Confiscate Gold, Jewelry, & Valuables From Refugees

    Submitted by Simon Black via SovereignMan.com,

    It started on December 8, 1931.

    Germany was in a world of pain at the time. They were still financially debilitated from having to make reparation payments after losing World War I, and had just barely recovered from one of the worst bouts of hyperinflation in recorded history.

    By the early 1930s, the onset of the Great Depression had taken hold in Germany, driving the government to desperation once again.

    They needed cash. And rather than go back to the printing press and risk hyperinflation again, German President Paul von Hindenburg signed a decree to create a new tax called the Reichsfluchtsteuer, nearly 84 years ago to the day.

    It was an exit tax… a type of capital control to dissuade people from leaving with their savings.

    So any German citizen with a certain level of income or assets who left the country would be charged a 25% wealth tax.

    The following year, in 1932, the government generated about 1 million marks in revenue from the tax.

    Of course since the tax was a ‘temporary’ measure, it was set to expire at the end of 1932.

    But they extended it. And kept extending it.

    By 1938, the German government collected an astounding 346 million marks from this tax.

    This nearly 350x increase in tax revenue over 6 years is incredible, making the Reichsfluchtsteuer one of the fastest growing taxes in human history.

    (By comparison, income tax receipts in the United States grew about 9-fold in the first six years of its history.)

    So what was the German government’s secret in having so much success with this tax?

    Simple. Their secret was the Secret Police.

    By the late 1930s, the Nazis had taken over.

    And even though there was no longer a reason to keep the Reichsfluchtsteuer on the books since the Depression had largely subsided, the Nazi regime kept extending the law, using it almost exclusively to target Jewish citizens.

    In fact, the Reichsfluchtsteuer became one of the core components of the Nazi’s confiscation strategy to plunder Jewish wealth.

    Now, I couldn’t help but think of the Reichsfluchtsteuer when I heard about the government of Denmark’s latest tactic against refugees today.

    This isn’t even something that has made the international, English-language news. We just happen to have a Danish-speaking member of our team.

    As he explained to me, Danish Justice Minister Soren Pind recently announced his intention to have border guards confiscate gold, jewelry, diamonds, and other valuables from refugees as they enter the country.

    After a bit of popular backlash, wedding rings are now off limits.

    But just about anything else ranging from cash to expensive wristwatches, is fair game for confiscation, as long as the ‘loot’ (as they call it) is valuable.

    So apparently Danish border guards are expected to discern whether a refugee is wearing a $15,000 IWC Schaffhausen or a $15 knock-off.

    (Clearly they spent a lot of time thinking about this policy and how to implement it.)

    Having armed men indiscriminately seize refugees’ personal belongings doesn’t strike me as the best representation of a free society. Not that this matters anymore.

    The Danish government’s excuse is that they need to confiscate assets from refugees in order to pay for the services they’re providing to those same refugees.

    This might even sound reasonable… until you realize that a government could make the same argument for every other public service they provide.

    It’s the same logic as confiscating funds from your bank account in order to provide you with the FDIC. Or seizing other assets to provide ‘free’ healthcare or education.

    When a government awards itself the authority to attack one particular group, they give themselves that same power to attack everyone.

    In the Land of the Free, they call it Civil Asset Forfeiture– a legal form of theft in which the government can administratively steal your assets with no Constitutionally guaranteed due process.

    The US government stole $4.5 billion worth of private property from its citizens last year alone, far more than the $3.9 billion stolen by common thieves according to FBI data.

    The trend is pretty obvious—governments are not shy at awarding themselves the authority to take whatever they want, whenever they want, from whomever they want.

    And they’ll always come up with a good excuse to justify it.

    This risk is not negligible. So as an insurance policy, it makes sense to ensure that you’re not holding 100% of your assets and savings within the control of a single government.

    After all, they may one day be so desperate that they’ll steal from you in the name of protecting you.

  • WTI Slumps Under $37 After API Reports Unexpected, Large Inventory Build

    Following last week's huge draw, total crude inventories were expected to drop 1 million barrels this week driven by expectations that refinery utilization rose last week. When API reported a hugely surprising 2.3 million barrel build, crude prices, which had drifted off highs after NYMEX close, dropped further as disappointment set in, back under $37.

    A majorly unexpected build…

     

    Ansd crude prices slumped back under $27…

     

    Charts: Bloomberg

  • Stephen Roach: "The Fed Has Set The Market Up For A Crisis"

    “The Fed is in total denial. It hasn’t learned the lessons of what it put the world through a decade ago,” Stephen Roach said, back in January.

    “I just go back to 2005 and 2006 where the Fed was so incremental in normalizing rates during a time of enormous froth in property markets, equity markets, credit markets and ultimately that led to huge distortions in the real economy and finally when the bubbles popped, the whole house of cards came down,” he added.

    Eleven months later and the Fed is just now getting around to an “incremental” (and if Roach thought past episodes of FOMC policy normalization where “incremental” just wait until he sees the trajectory this time around) hike. 

    Ahead of tomorrow’s oh so critical Fed decision (which may or may not trigger some kind of dramatic meltdown in EM), Roach is out with some fresh commentary on the Fed, the FOMC’s role in creating asset bubbles, China, and commodities. 

    “They pushed interest rates down to zero in the depths of the crisis, the crisis ended and they kept the policy rate at an emergency setting,” Roach told Bloomberg TV’s Angie Lau in an interview, bemoaning the fact that the world has been stuck in ZIRP for so long that nearly a third of Wall Street has never seen a rate hike. 

    The effect of this is and has always been the creation of asset bubbles. As Jeremy Grantham put it earlier this year, “in the Greenspan/ Bernanke/Yellen Era, the Fed historically did not stop its asset price pushing until fully- fledged bubbles had occurred, as they did in U.S. growth stocks in 2000 and in U.S. housing in 2006.” 

    Now back to Roach. “That [lower for longer rates] is a breeding ground for asset bubbles, credit bubbles, and all-too frequent crises, so the Fed is really a part of the problem of financial instability rather than trying to provide a sense of calm in an otherwise unstable world.”

    Right. And you can clearly see this from the following chart via RBS’ Alberto Gallo (note the ever larger swings in the financial cycle):

    When it comes to creating speculative excess, it’s almost as though the Fed has an unspoken third mandate.

    Here’s Roach driving the point home: “While Fed did a great job in reacting to global financial crisis, it played an equal role in setting markets up for the crisis by running uber-accommodative monetary policy.”

    He goes on to discuss China which he says “can’t be emphasized enough.”

    Beijing’s epochal shift from an investment-led, smokestack economy to a consumption and services-driven model is something many market participants still don’t understand – or at least not fully, he says. “Commodities are, after a super-cycle, obviously going the other way, big time,” Roach said. Some companies “are in denial that China is changing its character, its structure. It’s going to take a while for that to sink in, and until it sinks in, there’s still downward pressure on commodity markets and prices.”

    More in the interview below.

  • Pre-Fed Pandemonium – "Confident" Traders Buy Stocks, Dollars, Crude; Dump Bonds & Protection

    Artist's impression of The Fed statement and press conference tomorrow…

     

    Stocks, Crude, and USDJPY were loving it…

     

    Cash stock indices gapped open then went nowhere…

     

    Equities ran on the back of the algos to the stops at Thursday's pre-3rd Avenue collapse… then faded…

     

    Breadth was not buying it…

     

    FANGs ended the day very weak…

     

    Smith & Wesson was whacked… Revenge?

     

    Equity protection was puked like a bad Chipotle Burrito… (who needs hedges?) Notice the lack of beta in stocks even as VXX was slammed lower in the last hour…

     

    IG credit continues to underperform this week…

    The US high-yield market was on a firmer footing Tuesday with buying from both Exchange Traded Funds and institutional buyers – but market participants said it was far too early to say with any confidence that the recent rout in the asset class was over. The HY CDX 25 was 1.25bp higher at 100.6bp, according to Tradeweb, and cash bonds up to three points higher, a day after the Bank of America Merrill Lynch high-yield index breached 9% yields for the first time in four years. To be sure, the market is still wincing from the slap given by the Third Avenue junk fund redemption freeze and liquidation announced last week.

    Treasuries continued to get dumped…note again that the selling was dominated by the European session (smells of China dumping through Belgium?)

     

    The USDollar was heavily bid from the early morning…

     

    Commodities were mixed once again. Depsite a surging USDollar, PMs flatlined, copper crashed and crude soared…

     

    Crude algos ran the stops again…

     

    Nattie collapsed to near record lows…

     

    Charts: Bloomberg

    Bonus Chart: A Gentle Reminder of The Last Pre-FOMC Statement Ramp…

     

     

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