- CNN Goes There: Asks If Thomas Jefferson Memorials Should Be Removed Because He Owned Slaves?
As the Confederate Flag hysteria escalates, CNN's Ashleigh Banfield asks fellow CNN mouthpiece Don Lemon if it’s now appropriate for lawmakers to start a future conversation about whether or not the monument of Thomas Jefferson should be removed from the U.S. Capitol.
Thomas Jefferson–like a lot of people 270 years ago–owned slaves. He inherited them from his father. Jefferson gave away many of the estimated 170 slaves he owned after his death. While writing in the Declaration of Independence that “all men are created equal,” Jefferson didn’t believe blacks and whites were equals.
But Thomas Jefferson didn’t want to divorce from the union in order to preserve slavery. In fact, Jefferson wrote constantly and argued regularly about whether or not the founders should include the abolition of slavery in the Bill of Rights.
The bespectacled Banfield speaks…
* * *
Banfield is foolish to conflate the Confederate flag with a Thomas Jefferson memorial. And we fear the stupid won’t be receding anytime soon.
* * *
Just one more reminder, as we noted earlier, it seems few had any major "tear down these flags" problems with The Confederate Flag until some nutjob kills less people than die in Chicago every Friday night. Populist policy-setting and news media provocation by Lowest Common Denominator appears to be the nanny-state's new media normal.
- Keeping Government Bureaucrats Off the Backs Of The Citizenry: The Supreme Court Responds
Submitted by John Whitehead via The Rutherford Institute,
“No man in the wrong can stand up against a fellow that’s in the right and keeps on a-comin’.”—Texas Rangers
In one swoop, on June 22, 2015, a divided U.S. Supreme Court handed down three consecutive rulings affirming the right of raisin farmers, hotel owners and prison inmates. However, this push back against government abuse, government snooping and government theft only came about because some determined citizens stood up and took a stand against tyranny.
The three cases respectively deal with the government’s confiscation of agricultural crops without any guarantee or promise of payment (Horne v. U.S. Department of Agriculture); the practice of police gaining unfettered access to motel and hotel guest registries (City of Los Angeles v. Patel); and the use of tasers and excessive force by prison officials (Kingsley v. Hendrickson).
Whether these three rulings will amount to much in the long run remains to be seen. In the meantime, they sound a cautiously optimistic note at a time when police state forces continue to use advancing technologies, surveillance and militarization to weaken, sidestep and flout the Constitution at almost every turn.
In the first case, Horne v. U.S. Department of Agriculture, a 5-4 Supreme Court declared that raisin farmer Marvin Horne deserves to be compensated for the official seizure of one-third of his personal property by the government.
The case arose after independent raisin farmers in California were fined almost $700,000 for refusing to surrender about 40% of the raisins they produced to the government as part of a program purportedly aimed at maintaining a stable market for commodities.
Marvin and Laura Horne are independent farmers in California and have been growing raisins for almost half a century. During that time, the Hornes were subject to a Depression-era law promulgated by the U.S. Department of Agriculture that aims to create “orderly” market conditions for raisins by regulating their supply. Supply is regulated by requiring that raisin producers surrender a certain percentage of their raisins (a so-called “reserve tonnage”) each year to an administrative committee.
In 2002-2003, the reserve tonnage was set at 47% of the crop. The reserve tonnage may be sold by the government with the government paying itself first for administrative costs, and then providing pro rata payments to participating farmers. However, in 2002-2003, raisin farmers received payments that did not cover the expenses of production and in 2003-2004, no payments whatsoever were made for reserve tonnage raisins.
Although the Hornes attempted to arrange their operation to avoid having to give up part of their crop, the USDA assessed a monetary penalty of $695,226 against the Hornes for having failed to surrender raisins they produced between 2002 and 2004. The Hornes appealed this order, arguing that the requirement that they surrender, on pain of monetary penalty, a percentage of their property without any guarantee of compensation violated the command of the Fifth Amendment to the U.S. Constitution that private property shall not be taken for public use without just compensation. However, the U.S. Court of Appeals for the Ninth Circuit determined that the Fifth Amendment affords less protection to personal property than real property (land), and upheld the penalties. The Hornes subsequently appealed that ruling to the U.S. Supreme Court, arguing that the Fifth Amendment’s prohibition on government confiscation of property applies not only to the appropriation of land but with full and equal force to personal property such as agricultural crops.
The bigger picture: Whether you’re talking about raisins confiscated by the USDA, homes expropriated by government agencies under the rubric of eminent domain, or cars and cash seized by asset forfeiture-driven highway police, these various takings all add up to the same thing: government theft sanctioned by an endless assortment of arcane laws. Unfortunately, as I point out in my book Battlefield America: The War on the American People, the lines between private and public property have been so blurred that private property is reduced to little more than something the government can use to control, manipulate and harass the citizenry to suit its own purposes, while ‘we the people’ have been reduced to little more than tenants or serfs in bondage to an overbearing landlord. This is feudalism revisited.
In the second case handed down on June 22 (City of Los Angeles v. Patel), a 5-4 Supreme Court struck down a Los Angeles ordinance that permits the police to check guest registries at motels and hotels at any hour of the day or night without a warrant or other judicial review.
Section 41.49 of the City of Los Angeles Municipal Code requires all hotel owners to maintain a registry that collects information about persons staying at the hotel, including their names, addresses, vehicle information, arrival and departure dates, room prices, and payment methods.
Under this law, it is a crime for a guest to provide false or misleading information in registering at the hotel. The law also requires that hotels make these records available to any officer of the Los Angeles Police Department for inspection on demand, thereby allowing law enforcement officers to inspect this information at any time regardless of whether there is consent to the inspection or a warrant allowing it. Additionally, police need not have any measure of suspicion in order to review hotel registries under the ordinance and there need not be any history of criminal activity at the hotel. A hotel operator is guilty of a crime if he or she refuses to allow inspection.
In 2005, the Los Angeles Lodging Association and various owners and operators of hotels and motels in the city filed a lawsuit challenging the requirement of the ordinance that they grant unfettered access to their guest registries, arguing that the ordinance is a patent violation of the Fourth Amendment’s protection of persons’ houses, papers and effects against “unreasonable searches and seizures.”
In December 2013, the U.S. Court of Appeals for the Ninth Circuit upheld the hotel owners’ claims, ruling that the inspection of hotel registries by police is clearly a search for purposes of the Fourth Amendment. The Ninth Circuit also rejected the claim that hotels are a “closely regulated” industry that should expect government inspections, thereby holding that police are not excused from the general search warrant requirement.
Citing a fundamental right to privacy, travel and association, civil liberties advocates argued that the ordinance, which is similar to laws on the books in cities across the nation, flies in the face of historical protections affording hotel guests privacy in regards to their identities and comings-and-goings and burdens the fundamental rights of travel and association. Moreover, police should not be given carte blanche to rummage through records containing highly personal information because this could chill the exercise of other constitutional rights, such as the right to travel and the right of association.
The bigger picture: The practice of giving police officers unfettered, warrantless access to Americans’ hotel records is no different from the government’s use of National Security Letters to force banks, phone companies, casinos and other businesses to secretly provide the FBI with customer information such as telephone records, subscriber information, credit reports, employment information, and email records and not disclose the demands. Both ploys are merely different facets of the government’s campaign to circumvent, by hook or by crook, the clear procedural safeguards of the Fourth Amendment and force business owners to act as extensions of the police state.
In the last case, a 5-4 U.S. Supreme Court ruled in Kingsley v. Hendrickson that a lower court used an improper test to determine whether guards used excessive force against a pretrial detainee.
The case involves a Wisconsin man who alleged that he was subjected to unreasonable and excessive force in reckless disregard for his safety when prison guards forcibly removed him from his jail cell and subdued him with a stun gun.
In 2010, Michael Kingsley was arrested and booked into the jail in Sparta, Wisconsin, and detained there pending his court appearances on the charges against him. About a month into his detention, guards noticed that a sheet of yellow paper was covering the light above Kingsley’s bed, which was a common practice among detainees in order to dim the brightness of the facilities lights. The guards ordered Kingsley to remove the paper, but he refused, pointing out that he had not put the paper over the light.
The next morning, Kingsley was again ordered to remove the paper and again he refused. The jail administrator was then called, who told Kingsley he would be transferred to another cell. Five officers then came to the cell and ordered Kingsley to stand up. Kingsley protested that he had done nothing wrong, but was told to follow the order or he would be tasered.
Kingsley continued to lie face down on his bunk but put his hands behind his back and was handcuffed. The officers pulled Kingsley off the bunk, which allegedly caused injuries to his knees and feet and inflicted pain so severe Kingsley could not stand or walk. The officers then carried him to a receiving cell, placed him face down on a bunk and attempted to remove the handcuffs.
Although Kingsley denied that he resisted, the officers allegedly smashed his head into the concrete bunk and placed a knee into his back. When Kingsley told the officer to get off him, one of the officers tasered Kingsley for five seconds. As a result of this incident, Kingsley sued several officers involved, alleging that they used excessive force against him and that this violated his constitutional right to due process. A jury ruled against Kingsley, who subsequently lost his appeal to the U.S. Court of Appeals for the Seventh Circuit. Weighing in on the case, civil liberties advocates asked the Supreme Court to remove restrictions some courts have imposed on civil rights lawsuits for excessive force by inmates against jail personnel, thereby discouraging the use of excessive force by prison officials.
The bigger picture: In a police state, there is no need for judges, juries or courts of law, because the police act as judge, jury and law, and their version of justice is one-sided, delivered at the end of a gun, taser or riot stick. Unless the courts and legislatures act soon to change this climate of government-sanctioned police brutality, we may find that there is no real difference between those who are innocent, those accused of committing crimes and those found guilty, because we will all suffer the same at the hands of government agents.
Taken individually, these three cases may appear to be little more than small, procedural slaps on the wrist to government agencies that are so bloated, out-of-control and unaccountable as to scarcely register the slaps. However, taken together they serve as a potent reminder of what happens when a determined citizenry takes a collective stand against government abuse.
That said, if “we the people” don’t keep pushing back, standing up, and holding government officials accountable to the rule of law, these victories will do little to keep government bureaucrats off the backs of the American citizenry.
- Abe Ratings Crash To Record Lows, Japan Lowers Minimum Voting Age
The Abe Cabinet's approval rating plunged to 39%, matching a record low, as more than half of voters oppose the new US-sanctioned military/security legislation being debated in the Diet. The last time Shinzo Abe's approval ratings were this low, he called for a snap election and told Kuroda to unleash QQE2.0 which has only squeezed real wages to even record-er lows (24th month in a row of declines), destroyed-er elderly Japanese savings, and crushed-er the middle-class. As his popularity has waned, Abe has become more and more desperate to keep support and has, for the first time in 70- years, lower the minimum voting age from 21 to 18 (adding 2.4 million new voters who have not been demoralized yet by declining pension benefits and quality of life).
And he is losing the support of the voters…
The sharp decline in support was conspicuous among women, with the rate falling to 34 percent from 42 percent in the previous survey and the nonsupport rate rising to 37 percent from 31 percent.
It was the first time since the Nov. 29-30 survey for the nonsupport rate to exceed the support rate among women.
This should come as a no surprise since the quality of life is collapsing…
But this was not just about quality of life, the growing disillusionment with Abe and his policies is also focused on his newly US-enthused military actions…
The overall decline in support was apparently attributable to the fact that 53 percent of the respondents oppose the security bills being deliberated in the Lower House. Only 29 percent support the legislation, the survey showed.
Three constitutional law scholars said in the Lower House Commission on the Constitution on June 4 that the security legislation is unconstitutional. The Abe Cabinet countered their stance by releasing an opinion paper that said the bills do not violate the Constitution.
Fifty percent of the respondents agree with the three scholars while only 17 percent support the view of the Cabinet.
The security legislation would expand the overseas role of the Self-Defense Forces and could include the exercise of the right to collective self-defense, which Japan had banned before the Abe Cabinet changed the government interpretation of the pacifist Constitution.
Abe has said that he will explain the legislation and the need for the shift in security policy in a comprehensive manner.
However, 69 percent of the respondents said the prime minister’s explanations to the public have not been comprehensive, compared with 12 percent who answered that they are.
Sixty-five percent of the respondents said it is not necessary to pass the security legislation during the current Diet session, up 5 percentage points from the previous survey. Only 17 percent replied that passage of the bills is needed in the current session, down from 23 percent.
So what does he do… lower the minimum voting age from 21 to 18…
- *JAPAN LOWERS VOTING AGE TO 18 IN FIRST CHANGE FOR 70 YEARS
Politicians have long courted older voters with generous pension benefits, ballooning the national debt as Japan rapidly ages. Younger voters have stayed away from the polls in recent years. Less than 33% of those in their 20s exercised their right to vote in last year’s general election in December. In contrast, voter turnout for those in their 60s and over 70 were 68% and 60%, respectively.
In a populist act hoping to encourage younger more activist voters (who started with no wealth and are more pro-military aggression) to save him from another bout of explosive crippling diarrhea.
* * *
Just how much more can the aging Japanese population take? Or was war the ultimate Keynesian endgame all along – physical war that is… not the currency war that is crushing them currently.
- Ron Paul Warns Seizure Of Russian Assets Will Hasten Dollar Demise
Submitted by Ron Paul via The Ron Paul Institute for Peace & Prosperity,
While much of the world focused last week on whether or not the Federal Reserve was going to raise interest rates, or whether the Greek debt crisis would bring Europe to a crisis, the Permanent Court of Arbitration in The Hague awarded a $50 billion judgment to shareholders of the former oil company Yukos in their case against the Russian government. The governments of Belgium and France moved immediately to freeze Russian state assets in their countries, naturally provoking the anger of the Russian government.
The timing of these actions is quite curious, coming as the Greek crisis in the EU seems to be reaching a tipping point and Greece, having perhaps abandoned the possibility of rapprochement with Europe, has been making overtures to Russia to help bail it out of its mess. And with the IMF's recent statement pledging its full and unconditional support to Ukraine, it has become even more clear that the IMF and other major multilateral institutions are not blindly technical organizations, but rather are totally subservient lackeys to the foreign policy agenda emanating from Washington. Toe the DC party line and the internationalists will bail you out regardless of how badly you mess up, but if you even think about talking to Russia you will face serious consequences.
The United States government is desperately trying to cling to the notion of a unipolar world, with the United States at its center dictating foreign affairs and monetary policy while its client states dutifully carry out instructions. But the world order is not unipolar, and the existence of Russia and China is a stark reminder of that. For decades, the United States has benefited as the creator and defender of the world's reserve currency, the dollar. This has enabled Americans to live beyond their means as foreign goods are imported to the US while increasingly-worthless dollars are sent abroad. But is it any wonder after 70-plus years of a depreciating dollar that the rest of the world is rebelling against this massive transfer of wealth?
The Europeans tried to form their own competitor to the dollar, and the resulting euro is collapsing around them as you read this. But the European Union was never considered much of a threat by the United States, existing as it does within Washington's orbit. Russia and China, on the other hand, pose a far more credible threat to the dollar, as they have both the means and the motivation to form a gold-backed alternative monetary system to compete against the dollar. That is what the US government fears, and that is why President Obama and his Western allies are risking a cataclysmic war by goading Russia with these politically-motivated asset seizures. Having run out of carrots, the US is resorting to the stick.
The US government knows that Russia will not blithely accept Washington's dictates, yet it still reacts like a petulant child flying into a tantrum whenever Russia dares to exert its sovereignty. The existence of a country that won't kowtow to Washington's demands is an unforgivable sin, to be punished with economic sanctions, attempting to freeze Russia out of world financial markets; veiled threats to strip Russia's hosting of the 2018 World Cup; and now the seizure of Russian state assets.
Thus far the Russian response has been incredibly restrained, but that may not last forever. Continued economic pressure from the West may very well necessitate a Sino-Russian monetary arrangement that will eventually dethrone the dollar. The end result of this needless bullying by the United States will hasten the one thing Washington fears the most: a world monetary system in which the US has no say and the dollar is relegated to playing second fiddle.
- The World's Exposure To China In 6 Easy Charts
In “Global Trade To Remain Subdued Until At Least 2020,” we highlighted the following excerpt from a Goldman piece on depressed dry bulk shipping rates:
The transition from investment to consumption in the Chinese economy, together with a shift towards cleaner energy sources, has caused a sharp deceleration in dry bulk trade. After expanding at an average annual rate of 7% over the period 2005-14, seaborne demand in iron ore, thermal and metallurgical coal is set to increase by only 2% in 2015 to 2.5 billion tonnes as these trends persist. In the steel sector, domestic consumption growth ground to a halt in 2014 and the prospect of peak iron ore demand is nigh. In the power sector, demand for coal-fired generation is suffering from a combination of weaker economic growth, rising energy efficiency and a diversification in the fuel mix towards renewable energy, natural gas and nuclear. There are no other markets large and/or dynamic enough to offset a slowdown in China in the foreseeable future, and we forecast trade volumes to stabilize in the period to 2018.
This speaks to the fact that Chinese demand is effectively the engine that drives global growth and, as we’ve said on too many occasions to count, the country’s difficult transition from an investment-led economy to a model driven by consumption and services, combined with a war on pollution and an impossible attempt to curtail shadow banking while preserving robust credit creation, will ultimately conspire to make China unreliable as the centerpiece of the global recovery thesis. UBS has more on the above:
In the decade to 2014, China quadrupled the number of countries to which it was the biggest export market, as the US almost halved the number of countries for which it held the same title. Over the same period, all countries under our coverage saw China’s share of their exports hold broadly steady or rise up to four-fold. The jump in their direct “true” reliance on China (excluding reprocessing trade) was even more dramatic, with South Africa’s and Switzerland’s up by more than 8 times, and Australia’s by almost 5 times.
Two factors have made global exporters more directly reliant on Chinese domestic demand and thus more vulnerable to the ongoing property-led downturn in recent years: 1) rapid growth of China’s domestic market; and 2) processing trade’s declining share of Chinese trade due to China’s expanding productive capacity.
In this year’s version of our annual China export exposure chart book (available upon request), we show how China’s slowing economy is affecting commodity, reprocessing, and developed country exporters alike.
* * *
UBS concludes: “However, with China’s property construction deceleration set to deepen this year in a multi-year slowdown, we may see a longer-term decline in China’s appetite for foreign industrial imports.”
In other words, when China lands hard, so do the rest of us.
- Former Obama Jobs Tzar Immelt Threatens To Offshore GE Jobs If Ex-Im Bank Bill Expires
Submitted by Mike Krieger via Liberty Blitzkrieg blog,
Another year has come and gone, and it’s once again time to face the issue of a crony capitalist favorite: The Export Import Bank, also known as the Ex-Im Bank. Last year, I covered the contentious battle, which of course was ultimately won by powerful multi-national corporate interests. Here’s an excerpt from the piece, Officials at the Ex-Im Bank are Under Investigation as it Fights for Survival:
I think the most important aspect of this entire fight is the fact that on opposite sides of the debate are not Democrats versus Republicans, but once again Republicans vs. Republicans (as in the Dave Brat vs. Eric Cantor race). We again see tea party Republicans facing off against establishment RINOs. On one side we hear claims by the tea party wing that the Ex-Im merely serves as a conduit for crony capitalism and favoritism to large corporations, or those willing to bribe officials. On the other side, we see establishment Republicans, who are extremely cozy with mega-corporations, maintaining that the institution plays a crucial role in financing American exports to make them competitive.
Looking at this paragraph a year later, we have seen the revolting display of RINO Republicans pushing through the sovereignty destroying, corporate crony giveaway know as trade “fast track” of the TPP. We can once again marvel in disgust at how completely bought and paid for these establishment crooks really are.
Anyone with a remotely functioning brain will by now be aware that America is an oligarchy, not a democracy. In fact, a recent academic study by Princeton and Northwestern University found that the desires of the public have absolutely zero impact on public policy. What does have an impact is money. Lots and lots of money. This is where billionaire oligarchs and CEOs of large multi-national corporations come in, as they arrogantly throw around their clout to advance their wealth and power, and further drive the unwashed masses into hopeless serfdom.
GE’s CEO, Jeff Immelt, is a perfect example. This is what he had to say recently at the Economic Club of Washington. From Reuters:
General Electric Co Chairman Jeff Immelt warned on Wednesday that the company would move manufacturing jobs to Canada and Europe if the Export-Import Bank closes and that U.S. economic influence will wane if Congress blocks a major Pacific-rim trade pact.
Naturally, he fear mongered about the TPP at the same time. A double dose of crony corporate greed.
Speaking to business leaders at a luncheon of the Economic Club of Washington, Immelt said U.S. companies need market access and financing tools to help level the playing field in an “economic war for exports.”
The charter of the Ex-Im Bank, the U.S. government’s export credit agency, will expire on June 30, blocking it from writing new loans and trade guarantees, unless Congress acts to reauthorize it.
“In two weeks the U.S. will have neither trade deals, nor an export bank. And at that point we’re going to be in full retreat on the global economic stage,” Immelt said.
Well the American middle class has been in full retreat for more than four decades, but you don’t see Immelt too bothered by that.
“Good GE jobs in the United States will be moved to Canada and Europe. That’s a mighty high price to pay for ideological purity,” Immelt said.
Kind of reminds you of:
Hotair provided some solid analysis on this issue:
Immelt’s remarks were delivered at The Economic Club in Washington, DC and he was taking the same line we usually hear from Boeing. (The airplane manufacturer remains the largest beneficiary of the bank’s largesse with your tax dollars.) And the sad part is that, in a perfect world, there’s actually an argument to be made for some of the benefits of the program. Any time we can manage to increase our exports without giving away the ranch to other nations, that represents a net gain here at home in terms of jobs and injecting some juice into the domestic economy. Helping foreign buyers arrange financing achieves those goals.
But the flaws and potential pitfalls in the system are simply too big to ignore. First of all, Ex-Im was supposed to be giving a leg up to small businesses who want to expand their markets overseas. The reality quickly became something very different though, with some of the largest corporations scooping up most of the benefits. Also, there is the question of potential defaults. It’s true that the bank has a fairly good track record when it comes to customers making good on their debts, but in the event that one of them doesn’t the American taxpayer is on the hook for covering the losses. This creates an exposure for us in the event that a sudden, dramatic economic downturn which hits large portions of the industrial and developing world could result in many more defaults. The entity being “saved” in a case like this isn’t the US government… it’s a private business which should be responsible for shouldering their own risks.
If you work for GE, take close note of the despicable behavior from your CEO. You, your livelihood and your family’s well being mean nothing to Jeff Immelt. In fact, you’re nothing more than an easily expendable cog in his corporate game to accumulate even more wealth and more power for himself. He talks about you like you are chips on a poker table.
You have been warned.
- Russia Fed Up With US "Lecturing" As Pentagon Deploys 250 Tanks To Eastern Europe
On Monday we noted that Europe has moved to extend economic sanctions on Russia for another six months in response to Moscow’s alleged role in fueling the violence that now plagues Eastern Ukraine. This marks the latest escalation in the ongoing standoff between the Kremlin and the West and underscores the pace at which the situation is deteriorating. Here’s a recap of recent events:
Ukraine has seen its worst outbreak of violence since February’s ‘ceasefire’ this month, with both sides blaming the other for the intensification of hostilities. Meanwhile, the US has dusted off the Cold War playbook (although, ironically, Defense Secretary Ash Carter claims Washington’s stepped up “containment” efforts are part of a new, more modern strategy designed to help America avoid being pulled back into the Cold War), suggesting heavy weapons may be stored in Eastern Europe to ensure NATO forces can deploy quickly in the face of Russian “aggression.” Last week, Belgium, Austria, and France froze Russian state assets in an attempt to enforce an effectively unenforceable ECHR decision stemming from the long-running Yukos debacle, while Germany, Norway, The Czech Republic, and The Netherlands rehearsed a Ukraine siege in Poland.
Now, just a few days after NATO’s latest proxy war dress rehearsal, and just 24 hours after Ash Carter accused Russia of “nuclear saber rattling”, we have more details on the Pentagon’s plan to deploy heavy weapons in Eastern Europe. Speaking at a joint press conference, the Defense Secretary outlined the scope of US weapons deployment:
“We will temporarily stage one armoured brigade combat team’s vehicles and associated equipment in countries in central and eastern Europe. This pre-positioned European activity set includes tanks, infantry fighting vehicles, artillery. [Estonia, Lithuania, Latvia, Bulgaria, Romania and Poland have] agreed to host company- to battalion-sized elements of this equipment.”
(Carter looking particularly pleased on Monday)
In other words, here’s what working towards de-escalation and peaceful coexistence looks like to Washington: “250 tanks, Bradleys, and self-propelled howitzers, and associated armoured brigade combat team equipment [stationed] in Baltic and Central European countries.”
Meanwhile, Russia’s Commissioner for Human Rights, Democracy and the Rule of Law (yes, someone actually has that job title in Russia) has accused the US of sabatoging a bilateral agreement aimed at the pursuit of “common national interests” by adopting a “teacher-pupil” mentality. Here’s TASS:
Russia is ready to conduct an equal dialogue with the United States and is against the US lecturing on democracy building principles, Russian Foreign Ministry’s Commissioner for Human Rights, Democracy and the Rule of Law Konstantin Dolgov told TASS on Tuesday.
“The Russian-American presidential commission included the civil society group, and there were plans to continue its work,” Dolgov said. “But then we got the general answer that the United States was ‘so concerned’ about human rights in Russia that decided to freeze this group among the first — that’s the alogism.”
“We’ve never shed and don’t shed any tears over this,” the diplomat said. “By the way, the Russian and US civil societies are communicating.”
He said that Russian Foreign Minister Sergey Lavrov has recently commented on the general situation in relations with the United States. “We’ve received signals from the United States that they are willing to resume dialogue with us one way or another,” the Russian Foreign Ministry commissioner said. “We are fully ready for such a dialogue.”
The diplomat said Russia had very many problems with Washington in the human rights sphere, in particular, the situation with arrests of Russians in third countries at American requests, the situation with Russian children adopted by US families.
“Dialogue is always a two-way street. The ‘teacher-pupil’ formula will not work anymore,” he said. “It will be only an equal dialogue and we are ready to conduct this kind of dialogue.”
“And if they want to lecture us on democracy building ways, let them lecture students at some American university,” Dolgov said.
The reference here is to the 2009 U.S.-Russian Bilateral Presidential Commission. In April of last year, the US “temporarily suspended several projects and meetings planned under the auspices of the Commission” due to what Washington calls “Russia’s ongoing violation of Ukraine’s sovereignty and territorial integrity.” After cancelling the projects, the US proceeded to channel the associated funds straight to Ukraine:
“Funding for these activities has instead been used to contribute to a package of U.S. assistance to Ukraine, which is supporting economic reform and addressing other pressing needs.”
Fortunately for Dolgov, it doesn’t appear as though he, or any other Russian diplomats for that matter, will be forced to endure a “lecture” on democracy from the US anytime soon because as the positioning of 250 Bradleys and self-propelled howitzers, and associated armoured brigade combat team equipment” in Eastern Europe makes clear, the time for dialogue of any kind has long since passed.
- Best. Job. Ever: Coty CEO Paid $1.8 Million To Quit Before He Even Started
For all the drivelly, politically correct platitudes about how a great job is about emotional gratification, self-fulfillment and, of course, benefits such as a matching 401(k) and 2 weeks of paid vacation, the best job is the one where the least amount of effort generates the greatest compensation at the smallest amount of personal and career risk. In that case no job will ever match that of Coty CEO Elio Leoni Sceti, or rather non-CEO. Because whereas Sceti was scheduled to become Coty’s CEO in about a week, decided not to take the job.
The punchline, however, is that despite never actually having set foot in the company’s Empire State Building headquarters, or even working one day for his new employer, Coty is contractually bound to pay Leoni Sceti a severance (or is that non-signing bonus) of $1.8 million, as well as buying back all the shares the buyer’s remorseful CEO had purchased.
The company said in a news release that Leoni Sceti had “reconsidered” and will not join Coty. It did not disclose a reason for that decision. Coty said its chairman, Bart Becht, will remain interim CEO.
The company said the severance payment, which is equal to one year’s salary, was part of the employment agreement Leoni Sceti signed with Coty in April. The company will also pay about $55,000 to buy back preferred stock he had purchased.
Leoni Sceti, 49, is the former CEO of frozen foods maker Iglo Foods, the company behind the Birds Eye brand. Investment fund Nomad Holdings bought Iglo earlier this month and Leoni Sceti was replaced as its CEO.
And from the press release:
Peter Harf, Director and Chairman of the Remuneration and Nomination Committee of Coty commented, “After further discussion, the Coty Board of Directors determined that leadership continuity is critical in ensuring the continued success of Coty’s strategy implementation. We certainly understand Elio’s decision not to join Coty as planned, thank him for his professionalism throughout this process and we wish him all the best in his future endeavors.”
Sadly, had Coty worked at least one hour, he would have singlehandedly led to an explosive surge in the BLS’ lagging average hourly earnings category, and at $1.8 million/hour would, statistically mean US wages would have gone through the roof all thanks to one guy.
Alas, not even the BLS is equipped to resolve a situation where someone was paid $1.8 million for zero hours of work. Unless, of course, someone decides to double seasonally adjust ridiculous US CEO compensation as well…
- The Unspoken Tragedy In The Upcoming Greek Bailout
A day after Tsipras stunned both his peers at the Eurogroup summit, and not to mention his fellow parliamentarians, many of which already voiced their opposition to what has been dubbed a “capitulation” by the Greek prime minister over threats of a financial system collapse if there is no deal within the week, many questions remain:
- will the Troika come back with even more demands such as boosting the hotel and restaurant VAT even higher (economic suicide for a nation where tourism is the only viable industry)?
- will the IMF concede that the Greek proposal will ever be sufficient if it does not incorporate the demanded pension cuts?
- will the deal pass Greek parliament; will a deal come too late to save the insolvent Greek banks?
- will Greece get a debt haircut (paradoxically as demanded by the same IMF which is also demanding spending cuts instead of tax hikes, over the objections of the ECB which holds the vast majority of Greek debt and is leery of impairments)?
- will the German parliament agree to validate any deal that may end up splitting Syriza in two or more factions?
While stock markets are convinced a deal is inevitable, after all the can must be kicked as it has been for the past five years…
… that may be more problematic than the algos expect. Here are some quotes showing that despite Tsipras’ capitulation, few if any are ready to follow in his footsteps:
For example Austria:
Austria’s finance minister said on Tuesday there would be no agreement on new Greek budget proposals unless there was a concrete plan showing how they would be carried out. But he added: “If there is no programme for actions that says what measure will be implemented when , we will not agree to it.” “It should not, cannot, must not happen that a third (bailout) programme is started so to speak through the back door,” he said. (Source)
or Germany:
Members of Chancellor Angela Merkel’s coalition said the International Monetary Fund’s backing for a financing plan for Greece is key to German parliamentary support for a deal. “If there’s to be a payout, we need a detailed calculation by the IMF,” Antje Tillmann, the ranking Finance Committee member from Merkel’s Christian Democratic bloc, said by phone. “It has to add up to something sustainable.”
“For us, the IMF’s verdict is the benchmark for a credible, acceptable solution,” said Joachim Poss, deputy caucus leader in the lower house for the Social Democrats, Merkel’s junior coalition partner. (Source)
Or the IMF:
The IMF is still unhappy with key aspects of Greece’s new economic proposals and German officials were irritated by the speed with which the commission welcomed them, warning that much work needs to be done… IMF representatives have told European officials that they are also not satisfied yet by Greece’s broader economic overhaul plans beyond its budgetary promises. The IMF sees a wider, business-friendly shake-up of Greece’s economy as essential if the country is to improve its long-term economic growth. (Source)
Or impartial third parties:
“Very large problems remain for a solution,” said Jacob Funk Kirkegaard, a senior fellow at the Peterson Institute for International Economics in Washington. “The Greek government — somewhat surprising for a self-professed reform and anti- austerity government — seems to have merely agreed to impose a lot more austerity through higher taxes, but offers relatively little commitment to genuine economic reform.” (Source)
And certainly Greece:
“Personally, I cannot support such an agreement that is contrary to our election promises,” Dimitris Kodelas, a Syriza lawmaker associated with former Maoists, said in an interview. “I do not care about the consequences of my decision.” (Source)
The litany continues, and yet, somehow, we expect that in the next 48 hours, the machinery will be again in motion to kick the can once again for third time.
What happens then is basically a precursor to a third bailout package, one which according to previous reports, will be about €35 billion if and when a deal gets done.
At which point, assuming the funds are wired to Greece, the Athens government can congraulate itself on a job well done, even though, as some critics above pointed out, it “merely agreed to impose a lot more austerity through higher taxes, but offers relatively little commitment to genuine economic reform.”
One can ask: why didn’t any of the previous government impose higher taxes in the past 5 years? The answer is they did, and nobody paid them. And this is why this latest pre-bailout will also be a failure, followed perhaps by bailout #4, #5 and so on.
All of this is known to everyone.
What isn’t, or perhaps merely needs refreshing, is that assuming all of the above is resolved in a satisfactory matter, what will be the use of funds of this latest and greatest bailout of Greece.
Sadly, the answer is also well known. We showed it first back in 2011 when we asked, rhetorically, “where does the Greek bailout money go?“
So for those who don’t recall, here is a refresher from Macropolis, which a few months ago showed that of the €226.7 billion euros disbursed to Greece since the first Greek bailout, an equivalent to almost 125% of Greece 2014 GDP, “the combined allocation to the Greek state’s operating needs was just 11 percent of the total funding, at circa 27 billion euros.“
That’s right: hundreds of billions “spent” to rescue Greece… with the vast amount of proceeds used to promptly repay the very sources of these funds: the IMF and the ECB.
So will this time be any different, and will the Greeks receive anything extra? Alas no, because here are the near-term Greek debt interest and maturity payments…
… and the longer term.
So to emphasize, just in case there is any confusion: whatever money Greece receives as part of its third pre-bailout, followed by another full-scale bailout which according to SocGen will amount to another €60-80 billion or more, followed by another… until all Greek collateral – including its gold – finally runs out, will be used first and foremost to satisfy Troika, pardon, creditor claims.
Which means that of this widely touted €35 billion, Greece will be lucky to pocket a little over €3 billion. However, considering that is how much the Greek government has already extracted out of various public pensions and municipalities as part of its quasi-capital controls unrolled previously to preserve the illusion of solvency, after the hard fought “deal” finally is inked, the Greek population will be left with…
€0.
And that, sadly, is the unspoken tragedy in the upcoming Greek bailout. Because while it is one thing to bend over backwards to Troika interests if one at least gets something out of the deal, we completely fail to see why the Syriza government is risking its entire reputation, and doing what it is doing when in the end the Greek population which elected the “radical leftist” party with such wild hope and optimism has absolutely nothing to show for it.
- Confusion Reigns At PBoC As Multi-Trillion Yuan Bailout Threatens To Undermine Rate Cuts
A few months back, we began to ask ourselves what QE in China might look like.
In early March it became apparent that Beijing was caught between accelerating capital outflows and a decelerating, export-driven economy. This presented China with the following rather unpalatable choice: risk exacerbating capital outflows by devaluing to stabilize economic growth or stand firm on the currency front in an effort to stem the outflows and hope the economy doesn’t deteriorate further in the meantime.
Policy rate cuts had proven largely ineffective (as they have since) in terms of boosting the economy and so, we predicted that Beijing would ultimately join the rest of the world in the Keynesian twilight zone where ZIRP, NIRP, and perpetual debt monetization run roughshod over common sense.
Sure enough, the market soon began to debate the merits of a massive refi program designed to help China’s local governments crawl from beneath a debt pile that, thanks to off balance sheet LGFV financing, had grown to 35% of GDP. We suggested that one way or another, the PBoC would end up using the refi effort to implement some manner of backdoor QE.
China set the refi quota at CNY1 trillion initially which meant that the country’s provincial governments would be allowed to swap up to 1 trillion yuan of their LGFV debt for lower-yielding, longer term muni bonds. This was, essentially, a pilot program designed to gauge demand.
As it turns out, banks were not eager to swap higher yielding assets for lower yielding assets and after a few local governments pulled their offerings, the PBoC decided to create demand by doing two things: 1) compelling the banks to participate in the debt swap using the same tactics the party uses to compel banks to do a lot of other things, and 2) allowing the banks to pledge the new bonds for central bank cash which can then be re-lent into the real economy, effectively transforming the entire refi effort into a Chinese version of ECB LTROs. In other words, China went “unconventional” and was, at that point, just one step away from outright QE.
Here’s Morgan Stanley with a summary of the program to date:
Local Government Financing Vehicles (LGFVs) LGFVs came into the spotlight in 2011/12 after China’s US$20 trillion debt stimulus efforts to kick-start the economy following the global financial crisis. The central government wanted local governments to borrow money, but local governments were not allowed to borrow directly from the financial markets because of the Budget Law. Hence, we witnessed the rise in LGFVs, which serve as a platform for off-balance sheet lending of local governments to pursue mainly infrastructure projects. Details of the LGFV Debt Swap Program In mid-May this year, the MOF announced a RMB 1 trillion debt swap of LGFV loans into local government bonds. Another RMB 1 trillion was added in early June, bringing the total quota to RMB 2 trillion. Chinese banks are required to underwrite the local government bonds, at least for the same amount as the LGFV loans that will be repaid by the swap. The local government bonds would have a tenor of 1-10 years and coupon of 1-1.3x of the treasury yields.
Of course, the entire effort is nothing more than an attempt to kick the can further down the road and indeed, when the PBoC reversed course on the continuation of LGFV financing, it effectively undermined the program’s stated goal by allowing local governments to accumulate still more high cost debt just as they began to refinance their legacy loans.
But the program isn’t just a bailout for China’s provinces. It also amounts to a bank bailout because ultaimtely, it wasn’t clear how many local governments would have been able to service their loans going forward given the size of their debt load. WSJ has more:
China is bailing out the nation’s heavily indebted local governments, relying on trusted methods to keep its financial system stable despite promises to allow market forces to play a greater role.
Beijing is permitting provinces to issue at least 2.6 trillion yuan ($419 billion) in bonds in 2015, the first local-government issuances in more than 20 years, to stave off a debt crunch. Local administrations have accumulated some 18 trillion yuan in bank loans and bonds to fund risky land and property deals—equivalent to a third of China’s economy. As the real-estate market slows, state-owned banks that did much of the lending are on the hook.
The municipal bonds are aimed at allowing local governments to refinance short-term bank loans, which carry high interest rates of 7%. The move won plaudits from economists and investors as a market-based solution to the debt problem.
What is transpiring, however, is more akin to the public bailout of China’s state-owned banks in the 1990s. Back then, the government pumped billions of dollars in fresh capital into the banks and carved out bad loans from the lenders. Only around a fifth of the soured debt was ever recovered.
Beijing mandated last month that state-owned lenders buy the bonds, effectively swapping them for higher-interest loans. As in the past, the approach seems more like shifting around state resources, analysts said.
“Banks will remain the biggest buyers of local government bonds, which means the risk will stay in the system. It’s the same accounting treatment that Beijing used in the 1990s,” said Terry Gao, a senior analyst at Fitch Ratings.
Beijing allowed governments to negotiate directly with banks to swap maturing loans for bonds. As an enticement, the government is allowing banks, which face a squeeze on income because of the lower interest rates they are getting, to use the bonds as collateral for low-cost loans from the central bank.
“The debt swap is effectively a debt restructuring for banks,” said Zhu Haibin, J.P. Morgan Chase & Co.’s chief China economist.
For reference, here’s a look at debt by province, revenue growth by region, and the dramatic effect the program will have on WAM and funding costs:
While there’s probably a degree to which the program does represent a government-assisted bank bailout, it’s not entirely clear that the 200bps+ hit the banks are taking doesn’t negate the refi benefit. In other words, banks reduce credit risk and improve their capital position (lower risk weight for munis than for LGVF loans) but lose interest income that, once the first CNY2 trillion of bonds are swapped, could amount to around 2% of industry earnings. Additionally, to the extent the banks use PBoC cash obtained via LTROs to make loans to individuals and corporations, it’s not entirely clear that overall credit risk will improve either. Meanwhile, the extra supply is serving to undercut the PBoC’s efforts to keep rates low, in yet another example of China’s multiple easing efforts tripping over each other. Here’s Reuters:
Support for China’s economy from the central bank has been put at risk by a surge in municipal bond issuance that has driven up yields, undermining its efforts to cut borrowing costs.
Heavily indebted local governments seeking to refinance expensive debt have issued more than 600 billion yuan ($96.7 billion) of municipal bonds in the past month – more than in all of 2014.
Traders are betting government bond yields will rise rather than fall in coming months on the back of more debt sales, producing a tug-of-war between a People’s Bank of China (PBOC) determined to prop up flagging economic activity and a bond market awash with supply.
“The sudden fall in government bond futures really runs against the overall monetary easing trend,” said a senior trader at a major Chinese bank.
“It reflects market sentiment that investors are supplied with too much new debt of late, including local government bonds.” Five-year September 2015 government bond futures suffered their worst trading day of the year on May 26.
Driving the huge new issuance of municipal bonds is an estimated 22.6 trillion yuan of high interest local government debt, which provinces are struggling to refinance more cheaply.
This also serves to underscore what we said last month: because the central government is ultimately responsible for guaranteeing local government debt, and because yields on the new muni bonds are so close to those on treasurys, the newly issued local government bonds are really just treasury bonds, meaning that, in essence, the supply of Chinese government bonds is set to jump by CNY2 trillion in the coming months. If all of the local government debt ends up being refinanced, the end result will be the equivalent on CNY20 trillion in additional treasury supply.
The takeaway here is that while China is rather proud of the fact that it hasn’t yet implemented outright QE, Beijing has now put in place a bewildering hodge-podge of hastily construed easing measures that can’t seem to get out of their own way. For instance, successive RRR cuts have served to undermine efforts to ramp up ABS issuance (who needs balance sheet relief when the PBoC is slashing RRR?). And now we see excessive muni supply driving up yields even as the PBoC has cut the benchmark lending rate three times since November. Only time will tell whether the PBoC’s efforts will succeed in mitigating China’s economic slowdown, but in interim it’s worth noting that throwing things at the wall until something sticks is usually not a particularly effective strategy.
- Corporations Win Again: Senate Passes Obamatrade Fast-Track Bill
Ten days ago it seemed as if America’s corporatism would finally be slowed in its tracks after the House unexpectedly killed the fast-tracking of Obamatrade, aka the fast-tracking of the Trade Promotion Authority. Alas, it was not to last, and moments ago, in a “nailbiting” 60-37 vote, the Senate advanced Obama’s fast-track tarde bill.
The Senate on Tuesday voted to advance President Obama’s trade agenda, approving a measure to end debate on fast-track authority.
The 60-37 motion sets up a vote on final passage on Wednesday. If the Senate approves fast-track or trade promotion authority (TPA), it would then be sent to Obama’s desk to become law. Fast-track authority would allow Obama to send trade deals to Congress for up-or-down votes. The White House wants the authority to conclude negotiations on a sweeping trans-Pacific trade deal.
Thirteen Democrats backed fast-track in Tuesday’s vote, handing Senate Majority Leader Mitch McConnell (R-Ky.) a major legislative victory.
They did so even though the trade package did not include a workers assistance program for people displaced by increased trade. The Trade Adjustment Assistance (TAA) program was a part of the last fast-track package approved by the Senate in May, but became a key part of opposition to the package among Democrats in the House.
To move fast-track forward, the White House and GOP leaders in both chambers decided to break TAA away from fast-track, and to try to approve both in separate votes.
After the Senate votes Wednesday on final passage for fast-track, it will take a procedural vote on a package that includes TAA and trade preferences for African countries known as the African Growth and Opportunity Act.
McConnell has promised both bills, as well as a customs and enforcement bill favored by Democrats, will reach Obama’s desk by the end of the week.
“If we all keep working together and trusting each other, then by the end of the week the President will have TPA, TAA, and AGOA and Preferences on his desk — with Customs in the process of heading his way too,” he said on the floor.
And since the House has already passed fast-track, and now must only vote on the package including TAA, which faces token opposition from conservatives, expect the TPA and shortly thereafter, the TPP, to be enacted despite yet another round of dramatic theater by the best representatives US corporations can bribe.
Finally, as a reminder, “This Is How Little It Cost Goldman To Bribe America’s Senators To Fast Track Obama’s TPP Bill“
* * *
Earlier:
Today brings Round 2 in “the most transparent administration ever”‘s attempt to pass the incredibly opaque Fast-Track Authority enabling Obama to negotiate the Trans-Pacific-Partnership corporate coup d’etat (and all the other trade deals currently floating around) without fear of irritation from any outsiders. However, it won’t be easy-sledding as The Hill reports, labor groups led by the AFL-CIO are furiously lobbying Democrats to oppose fast-track authority when the Senate votes on a procedural motion Tuesday. Union leaders warn enabling Fast-Track prematurely would “compound its expected negative impacts, leaving U.S. workers in the lurch and depriving the U.S. manufacturing sector of vital tools necessary to combat unfair trade.”
But once again – after more drama – the corporations win!
- *U.S. SENATE ADVANCES OBAMA’S FAST-TRACK TRADE LEGISLATION
But, as The Hill reports, Obama may face some trouble ahead
The measure would help Obama negotiate the largest trade deal in history with 11 other countries along the Pacific Rim by limiting interference from Congress.
Obama’s trade bill needs 60 votes, and he can afford no more than two Democratic defections who previously backed fast-track. As of Monday evening, he had not yet secured public promises from all the Democrats he needs.
Backers of fast-track likely need a dozen Democratic votes because five of the Senate’s Republicans voted against the trade package last month and Sen. Ted Cruz (R-Texas) is indicating in an op-ed on Breitbart News that he will change his vote from yes to no. Cruz, who is running for president, says he is wary of backroom negotiations, expressing concern that the Export-Import Bank reauthorization will be included in the horsetrading.
…
The Senate’s vote Tuesday to end debate on fast-track — if it gets 60 backers — will set up a final roll call on the measure later in the day or Wednesday.
The chamber would then vote on a package of trade preferences combined with the African Growth and Opportunity Act and TAA. That measure is expected to clear Wednesday or Thursday.
Senate Democratic leaders are not whipping against fast-track, leaving it to unions to do the heavy lifting to defeat it.
The AFL-CIO urged Democrats Monday to vote against fast-track and warned they had no guarantee that TAA will pass the House, where many Republicans oppose it.
“Without assurances that TAA will pass the House, or that the customs bill will ever see the president’s desk, considering Fast Track prematurely could compound its expected negative impacts, leaving U.S. workers in the lurch and depriving the U.S. manufacturing sector of vital tools necessary to combat unfair trade,” William Samuel, the union’s director of government affairs, wrote in a letter to senators.
…
Heritage Action for America urged Republican senators to vote against fast-track Tuesday.
The conservative advocacy group argued that passing fast-track would pave the way for later passage of what it called the “ineffective” TAA program, which is paid for with tax penalties.
“The new pay for — included in H.R. 1295 which the Senate will also consider this week — increases revenue by raising certain tax penalties. New spending should not be offset by new revenues,” the group wrote in a legislative alert Monday.
But there are supporters, toe-ing Obama’s tyrannical line…
“The trade package currently before the Senate is a blueprint for trade done right,” Wyden said in a statement. “It will make our country stronger by opening new markets to American products and creating new opportunities for good-paying American jobs.”
Supporters of fast-track argue that trade supports more than 4.7 million jobs in California.
But we leave it to Ellen Brown to sum up just what this “sentence first, verdict afterwards” bill is really all about… a corporate coup d’etat…
`Let the jury consider their verdict,’ the King said, for about the twentieth time that day.
`No, no!’ said the Queen. `Sentence first–verdict afterwards.’
`Stuff and nonsense!’ said Alice loudly. `The idea of having the sentence first!’
`Hold your tongue!’ said the Queen, turning purple.
`I won’t!’ said Alice.
`Off with her head!’ the Queen shouted at the top of her voice.
— Lewis Carroll, “Alice’s Adventures in Wonderland”
Fast-track authority is being sought in the Senate this week for the Trans-Pacific Partnership (TPP), along with the Trade in Services Agreement (TiSA) and any other such trade agreements coming down the pike in the next six years. The terms of the TPP and the TiSA are so secret that drafts of the negotiations are to remain classified for four years or five years, respectively, after the deals have been passed into law. How can laws be enforced against people and governments who are not allowed to know what was negotiated?
The TPP, TiSA and Transatlantic Trade and Investment Partnership (or TTIP, which covers Europe) will collectively encompass three-fourths of the world’s GDP; and they ultimately seek to encompass nearly 90 percent of GDP. Despite this enormous global impact, fast-track authority would allow the President to sign the deals before their terms have been made public, and send implementing legislation to Congress that cannot be amended or filibustered and is not subject to the constitutional requirement of a two-thirds treaty vote.
While the deals are being negotiated, lawmakers can see their terms only under the strictest secrecy, and they can be subjected to criminal prosecution for revealing those terms. What we know of them comes only through WikiLeaks. The agreements are being treated as if they were a matter of grave national security, yet they are not about troop movements or military strategy. Something else is obviously going on.
The bizarre, unconstitutional, blatantly illegal nature of this enforced secrecy was highlighted in a May 15th article by Jon Rappoport, titled “What Law Says the Text of the TPP Must Remain Secret?” He wrote:
It seems like a case of mass hypnosis. . . .
Members of Congress are scuttling around like weasels, claiming they can’t disclose what’s in this far-reaching, 12-nation trade treaty.
They can go into a sealed room and read a draft, but they can’t copy pages, and they can’t tell the public what they just read.
Why not?
If there is a US law forbidding disclosure, name the law.
Can you recall anything in the Constitution that establishes secret treaties?
Is there a prior treaty that states the text of all treaties can be hidden from the people?
To Congressmen who say they cannot reveal what is in a treaty that will adversely affect the lives of hundreds of millions of people, Rappoport says:
Wrong. You’re lying. You can reveal secret text. In fact, it’s your duty. Otherwise, you’re guilty of cooperating in a RICO criminal conspiracy.
A Corporate Coup d’État
What is going on was predicted by David Korten in his 1995 blockbuster, When Corporations Rule The World. Catherine Austin Fitts calls it a “corporate coup d’état.”
This corporate coup includes the privatization and offshoring of the judicial function delegated to the US court system in the Constitution, through Investor-State Dispute Settlement (ISDS) provisions that strengthen existing ISDS procedures.
As explained in The Economist, ISDS gives foreign firms a special right to apply to a secretive tribunal of highly paid corporate lawyers for compensation whenever the government passes a law to do things that hurt corporate profits — such things as discouraging smoking, protecting the environment or preventing a nuclear catastrophe. Arbitrators are paid $600-700 an hour, giving them little incentive to dismiss cases. The secretive nature of the arbitration process and the lack of any requirement to consider precedent give wide scope for creative judgments – the sort of arbitrary edicts satirized by Lewis Carroll in Alice’s Adventures in Wonderland.
To date, the highest ISDS award has been for $2.3 billion to Occidental Oil Company against the government of Ecuador over its termination of an oil-concession contract, although the termination was apparently legal. Under the TPP, however, even larger and more unpredictable judgments can be anticipated, since the sort of “investment” it protects includes not just “the commitment of capital or other resources” but “the expectation of gain or profit.” That means the rights of corporations extend not merely to their factories and other “capital” but to the profits they expect to receive. Just the threat of a massive damage award for impairing “expected corporate profits” could be enough to discourage prospective legislation by lawmakers.
The Trade in Services Agreement adds additional barriers to proposed legislation. TiSA involves 51 countries, including every advanced economy except the BRICS (Brazil, Russia, India, China, and South Africa). The deal would liberalize global trade in services covering close to 80% of the US economy, including financial services, healthcare, education, engineering, telecommunications, and many more. It would restrict how governments can manage their public laws, and it could dismantle and privatize state-owned enterprises, turning those services over to the private sector. It would also block the emerging trend to return privatized services to the public sector, by limiting or prohibiting governments from creating or reestablishing public utilities and other “uncompetitive” forms of service delivery.
It seems that the TPP, TTIP and TiSA are not about the sort of “free trade” that would free local businesses to sell abroad. They are about freeing international corporations from the government regulation necessary to protect the economy, the people, and the environment. They are about preserving privatized monopolies and preventing competition from the public sector. And they are about moving litigation offshore into private arbitrary tribunals – the sort of tribunal that might have lost Alice her head, if she had not awakened from her bizarre dream.
* * *
- The "Smart Money" Just Sold The Most Stocks In History
Last week, following the Fed’s latest rate hike punt, stocks soared higher after realizing that not only is the Fed not ready to hike, but it will almost certainly not hike in September nor December (as the country will be covered by GDP crushing snow then). And despite some modest selling on Friday as the first images of Greek ATM lines spread, the S&P still finished nearly 1% higher for the week.
Any other week this would have been a perfectly normal event but according to Bank of America last week, this was not any other week. In fact, according to BofA’s Jill Hall, “BofAML clients were big net sellers of US stocks in the amount of $4.1bn, following four weeks of net buying. Net sales were the largest since January 2008 and led by institutional clients—after three weeks of net buying, institutional clients’ net sales last week were the largest in our data history.”
What was sold? Pretty much everything, although mostly large caps:
- Net sales last week were chiefly due to large caps (biggest sales ever of this size segment), though small and mid-caps also saw outflows.
- Institutional clients were broad-based net sellers of stocks in all ten sectors last week, led by Financials and Tech. Only ETFs saw (small) net buying by this group.
- Hedge funds were net sellers of eight of the ten sectors last week, led by Health Care and Materials. Only Tech and Utilities, along with ETFs, saw net buying by this group.
It wasn’t just the mutual funds: “Hedge funds were net sellers for the ninth consecutive week.” Who was buying? Sadly, the dumb, “retail” money: “private clients bought stocks last week following the previous week’s net sales.”
Then again, as the chart below shows, the “retail” money is hardly that dumb these days, and has been consistently selling all throughout the rally, leaving the “smart money” scrambling who to sell to, and also leading to such amusing demands as Carl Icahn telling AAPL to please buy his stocks. Because nobody else will…
Actually it’s not just retail that no longer “buys”, both literally and metaphorically, the market. Pension funds have also seen their cumulative stock purchases go back to levels last seen in 2007!
What is perhaps even more surprising is that on a rolling basis, every client class has been a net seller:
- Hedge funds are net sellers of US stocks on a four-week average basis, which has been the case since late April. They are also net sellers YTD, after selling stocks in 2014 as well.
- Institutional clients are now net sellers of US stocks on a four week average basis, after being net buyers since late May. They were the biggest cumulative net sellers in 2014, and are also net sellers YTD.
- Private clients are net sellers of US stocks on a four-week average basis, which has been the case since late April. They were cumulative net sellers of stocks in 2014, but are net buyers YTD.
Which begs the question: how is the market just shy of all time highs… we ask rhetorically, of course…
So was this all a pre-Grexit cash out panic? Perhaps, but it also appears to have been quite targeted, with an emphasis on what has become the biggest industry bubble within the broader market: health care. In fact, healthcare selling was the biggest ever:
Net sales last week were broad-based, with stocks in all ten GICS sectors seeing outflows, led by Health Care and Financials. Net sales of Health Care were actually the largest in our data history (see our Chart of the Week, below), and the sector continues to have the longest net selling trend at six consecutive weeks. It has also seen the largest outflows year-to-date. This sector has generally outperformed the market over the last four years. The more defensive sectors of Staples, Utilities and Telecom saw the smallest outflows last week; only ETFs saw net buying.
The two Consumer sectors, Financial, Health Care, Energy, Industrials and Telecom saw net sales from institutional clients, private clients and hedge funds alike last week. Only ETFs saw inflows from all three groups.
Charted:
Finally, in the New Normal, it is no longer the smart, or dumb, money that is the marginal price setter but corporations themselves, via record amounts of stock buybacks. This is how they fared:
Energy stocks have notably seen a tick-up in buybacks by our corporate clients over the last three weeks, with <$6mn per week in Energy buybacks year-to-date through June but between $40-100mn each of the last three weeks.
Buybacks last week were largest within the Financials sector, followed by Consumer Staples. This was also true the previous week.
Indeed, with everyone else selling, it was corporations that continued their buyback ways.
And the worst news: with everyone else dumping stocks at a (near) record pace, the buyer of last resort, corporate buybacks, are about to enter that most dreaded period of the quarter: the blackout period that surrounds earnings releases. As such, starting this week and continuing for the next month, stock repurchases will grind to a halt.
One can hope that the Bank of Japan and the Swiss National Bank have some serious firepower left to pick up the slack: they are now, quite literally, the buyers of last resort.
- Pop Goes The Bubble
Submitted by Dmitry Orlov via ClubOrlov blog,
I know that many people see national finances as an impenetrable fog of numbers and acronyms, which they feel is best left up to financial specialists to interpret for them. But try to see national finances as a henhouse, yourself as a hen, and financial specialists as foxes. Perhaps you should pay a little bit of attention—perhaps a bit more than one would expect from a chicken?
By now many people, even the ones who don't continuously watch the financial markets, have probably heard that the stock market in the US is in a bubble. Indeed, the price to earnings ratio of stocks is once again scaling the heights previously achieved just twice before: once right before the Black Tuesday event that augured in the Great Depression, and again right around Y2K, when the dot-com bubble burst. On Black Tuesday it was at 30; now it's at 27.22. Just another 10% is all we need to bring on the next Great Depression! Come on, Americans, you can do it!
These nosebleed-worthy heights are being scaled with an extremely shaky economic environment as a backdrop. If you compensate for the distortions introduced by the US government's dodgy methodology for measuring inflation, it turns out that the US economy hasn't grown at all so far this century, but has been shrinking to the tune of 2% a year.
And if you ignore the laughable way the US government computes the unemployment rate, it turns out that the real unemployment rate has grown from 10% at the beginning of the century to around 23% today.
So how can an ever-shrinking economy with a continuously rising unemployment rate be producing ever-higher stock valuations?
Simple! The stock prices are being driven up by the actions of the Federal Reserve. Since the great financial crisis of 2007, when the entire financial system almost collapsed, the Federal Reserve, through its Quantitative Easing (QE), has been making funds available at minimal cost to a set of financial institutions deemed “too big to fail.” (What that means is that they cannot be allowed to fail, because that would almost bring down the entire financial system again, but must be artificially propped up no matter what.) This financial life support has dramatically driven up the Fed's balance sheet, which now stands at $4.5 trillion (it was less than $1 trillion before the great financial crisis of 2007).
The mechanism by which QE drives up stock prices is indirect, but the connection is easy to trace. The Fed makes money available by buying up various types of securities: lots of mortgage-backed securities (many of them worthless, but the Fed doesn't care), lots of US Treasuries (and the Fed should care that they don't become worthless), plus a little of this and that.
By doing so, the Fed artificially drives down interest rates on what are traditionally the safest investments—those that people like to put their savings in if they don't want to risk losing them. But when the returns on these “safe” investments become lower than the rate of inflation, the risk of loss becomes 100%, and people are forced to choose between other, less “safe” options, and watching their savings slowly evaporate. The pressure to find ways to invest money more gainfully drives money out “safe” investments and into unsafe, speculative ones: stocks, that is. And this has created the bubble in stocks.
At this point, someone might want to ask a perfectly reasonable question: What is the purpose of having a stock market anyway? Well, theoretically, its purpose is to provide public companies with a way to raise money for their operations. Investors look for safe but gainful ways to allocate their capital, and, through their efforts, allocate this capital efficiently, so that it drives an economic expansion, and produces prosperity. But there is no economic expansion, and no prosperity! Maybe that's because public companies haven't been making use of the stock market to raise funds to invest in productive activities. And what have they been doing instead? They have been taking advantage of very low interest rates to borrow money, and using that money to buy back their own stock:
Why? Because that drives up the price of their stock, and because their chief executives (who already make 300 times more than their employees) are even more hugely rewarded if the stock price goes up. Hearing this causes some people to exclaim: “Hey, that's corruption!” No, it's just the American way of doing business. But what, pray tell, is the difference? In any case, stock buybacks are now going for a new all-time record. (The previous record was set right around when the entire financial system almost collapsed, in 2007.) According to WSJ, “The rise now puts 2015 on pace to reach $1.2 trillion worth of announced buyback programs, shattering the 2007 record of $863 billion in authorized buybacks, Birinyi said Thursday.”
Now, please note that it is not the purpose of a stock market to keep shareholders happy through borrowing and stock buybacks: this is unproductive for the economy as a whole. Also please note that this can't go on forever. The Fed has been lowering interest rates more or less continuously since 1982, when the then Fed Chairman Paul Volcker succeeded in fighting off inflation by briefly hiking the rate up above 18%. Continuously dropping interest rates make it possible for big financial players to gamble with borrowed money almost risk-free. If they gain—great; if they lose—they can still be sure of being able to roll over their debts at a lower rate, and play again.
But then in 2009 the Fed funds rate went to zero, and stayed there. This condition has a fancy name: Zero Interest Rate (Monetary) Policy, or ZIRP. Because it's an actual “policy,” that makes it all right; it's the difference between falling flat on your face because you tripped and stretching out on the sidewalk just to do some yoga.
The rate would like to go negative, but it can't. Because, you know, that's the kind of debt even I wouldn't turn down (by the way, I don't have any debt). It's the kind of debt where you give me your money, and then you keep paying me periodically to hold on to it, or spend it, or gamble it away—that's none of your business—until forever, because I have no intention of ever paying you back; I'll just keep rolling it over at ever more negative interest rates, and you will have to go on lowering them, because if you don't I might cut down on my gambling and crash the financial system again. If you agree to these terms, then you might as well also give away your wallet and your car keys—just to see what happens.
The Fed dropping interest rates below zero would be approximately as funny as that. And so the Fed funds rate is stuck at zero: it can't go down and it can't go up. The Fed keeps making periodic threats about raising it—by a whopping 1/4 of 1%—and this causes a brief swoon in the financial markets each time, but then everything goes back to normal (if you want to call it that). If the Fed ever did raise the rate, that would pop the bubble, and we'd be right back to collapsing like it's 2007.
It is worth noting that these financial shenanigans are having a profound effect on the real economy of jobs and goods and services: they are starving it. Many observers have noted that the Fed's actions are driving up wealth inequality to ever-greater heights. But this is just blah-blah-blah: wealth inequality in the US has been on the rise practically forever, with just a few minor setbacks here and there, so there is nothing new here. Ever-increasing wealth inequality is as American as eating out of a bag, neck tattoos, gaudy diamond engagement rings, knee-length swimming trousers and Mickey Mouse. They might as well claim that Fed policies are making Americans fat, lazy and stupid. Are they?
But the ever more bloated financial sector is definitely crowding out the other sectors of the economy—ones which actually produce goods and services that people use. No matter how easy monetary policy becomes, the opportunities to invest in the real economy just aren't there. Consider:
- You want to invest in agribusiness? Well, Americans are already fat as pigs; the last thing they need is more high fructose corn syrup.
- You want to invest in the automotive industry? Well, the people are already spending an average of 14% of their waking hours driving mostly short distances, sitting in traffic, breathing carbon monoxide and giving themselves mild but progressive brain damage; where do you want to go with that?
- You want to invest in gadgets? Well, Americans are already glued to a screen of one sort or another throughout most of their waking hours. Sure, there are lots of business plans out there, but most of them look a lot like this:
1. Monetize sexting (or whatever)
2. ???
3. Profit!(By the way, I think that's called Snapchat, and its valuation is around $15 billion.) But none of them seem like real breakthroughs, because they still require people to be glued to their little screens 24/7, and we have already achieved that. We'd need to make gadgets for their gadgets to play with, to free up their time so that they can get something useful accomplished, but nobody has figured out how to do that yet.
- You want to invest in military hardware? Well, nobody wants tired old American stuff; just about everybody—even our friends the Iraqis, and now even the Saudis—are interested in buying Russian. Plus the Americans don't even know what to do with the stuff they already have. Accidentally give some more of it to ISIS or to the Yemenis? Abandon it in Afghanistan for the Taliban to play with? The latest plan is to stockpile it on Russia's borders, so that the Russians can use it for target practice, blowing it up with their long-range artillery without having to invade anyone.
And so on.
And so all that Americans can do with all this free money is gamble with it. There are lots of worthwhile ways to spend money—build public transportation, for instance—but the problem is that none of them make money. And that, stupid though it seems, is a requirement. But creating a huge, wasteful financial casino alongside the real economy doesn't help the real economy—it crowds it out. And it doesn't really make money either; it makes bubbles. This should in some measure explain the more or less continuous economic shrinkage that has been happening in the US so far this century.
It is also worth noting that, dire though these negative effects already seem, Americans have by no means seen the worst of it yet. The story one commonly hears is that the US is the richest country on earth. Well, that may be true, on average, if you include financial wealth (which tends to be rather ephemeral), overvalued real estate (which is another great big bubble), promises that won't be kept (such as the various retirement schemes that will never pay out) and much else that isn't quite real. But it is definitely true that the US also has the largest group of incredibly poor people—much poorer than the poorest person in the poorest country on Earth.
Their wealth is measured in the hundreds of thousands of dollars—but with a negative sign in front. They are deep in debt from investing in overvalued real estate (most houses in the US aren't really worth the skinny little sticks that hold up their roofs), or from getting an overpriced higher education (which has qualified them to serve coffee), or from running up other kinds of debt. Some of them may still look rich and prosperous for the moment, but that's only because… you guessed it, four whole decades of ever-lower interest rates! Once interest rates start ticking up, and their entire incomes are gobbled up by interest payments, they will start looking as destitute as they actually are.
How might this transition come about? Well, it might be catastrophic: some day some fat pig of a trader comes back from his 1000-calorie buffet lunch and passes a massive volume of gas. His explosive flatulence causes his colleagues to either faint, projectile vomit all over their trading terminals, or run for the exits. In the meantime, their high-frequency trading algorithms, left unattended, flash-crash the entire financial system to kingdom come.
But let's not wax apocalyptic here, because a much more mundane scenario will do just as well. Some day soon the stock market suffers a wee drop. This causes a little bit of a shuffle toward the exits and into “safe” investments in the form of US government debt. But that day there are a few more sellers of US government debt than usual, and the price of it drops. That's because over a third of it is held by foreign entities, many of which have been working hard to get out of the US dollar for some time now. China is at the top of the list with $1.3 trillion in US Treasuries, and has been busy signing bilateral trade agreements that circumvent the dollar system. Spooked by the sudden drop, foreigners start dumping US Treasuries. The traders see an advantage in getting out of stocks and into the suddenly much cheaper Treasuries, the trickle turns into a stampede, and stocks and Treasuries both crash because there are now many more sellers than buyers of either.
Next, the sellers of Treasuries rush to sell off their hoard of US dollars for other currencies—the ones they now use to trade with each other—and the dollar drops in value. The resulting scene looks like this. The stock market has cratered (so it's time to break open your child's piggybank and buy her a handful of railroad and utility stocks). US Treasuries are trading at a fraction of their face value, promising huge gains once they reach maturity—but to be paid out in worthless dollars. The Fed is helpless to do much of anything except print-print-print more worthless dollars as long as there is more paper and the lights are still on. The US Treasury starts trying to issue debt denominated in foreign currencies—with poor results, because foreign investors think that the US is too risky. The terms “capital controls” and “national default” are thrown around, just like they are in Greece at this very moment.
Regardless of what the Fed tries to do or say, the effective new interest rates are much higher, and most borrowers are no longer able to roll over, never mind expand, their debt. This includes the federal government, US states and municipalities, and corporations: kiss your benefits and your retirements good-bye. For importers, securing access to imports, such as oil, now involves borrowing in foreign currencies—at exorbitant rates of interest because the US is now a bad credit risk.
It is only at this point that I imagine an appreciably large number of Americans will put down whatever they happen to be mindlessly stuffing into their faces, pull their eyeballs away from the nearest screen, look at each other and ask: “Why did this happen?” Well, I am no financial expert, and yet I was able to piece all of this together based on freely available information, much of it from the US Government and the Federal Reserve, the rest from sources such as shadowstats.com, which I know and trust, and from having watched things collapse at other times and in other places.
So, let me ask you some questions: What, if anything, is unclear to you about any of this? Does any of this come as a surprise? Why do you think this is this so difficult for so many people to understand? and, What are you waiting for?
- White House Lies (Again): Jonathan "Stupidity Of The American People" Gruber Called "Our Hero"
Submitted by Mike Krieger via Liberty Blitzkrieg blog,
Jonathan Gruber, the Massachusetts Institute of Technology economist whose comments about the health-care law touched off a political furor, worked more closely than previously known with the White House and top federal officials to shape the law, previously unreleased emails show.
The emails show frequent consultations between Mr. Gruber and top Obama administration staffers and advisers in the White House and the Department of Health and Human Services on the Affordable Care Act. They show he informed HHS about interviews with reporters and discussions with lawmakers, and he consulted with HHS about how to publicly describe his role.
The White House has described Mr. Gruber as having a limited role in crafting the law. President Barack Obama in 2014 said Mr. Gruber was “some adviser who never worked on our staff.” Mr. Gruber told Congress last year he disagreed with the widespread characterization of his role as the “architect” of Mr. Obama’s health-care plan.
“Thank you for being an integral part of getting us to this historic moment,” according to Sept. 9, 2009 email to Mr. Gruber from Jeanne Lambrew, a top Obama administration health adviser who worked at HHS and the White House. In a November 2009 email, she called Mr. Gruber “our hero.”
– From the Wall Street Journal article: MIT Economist Jonathan Gruber Had Bigger Role in Health Law, Emails Show
Pretty much anyone reading this post will be intimately familiar with Jonathan “stupidity of the American voter” Gruber. In case you need a refresher, here’s an excerpt from last fall’s piece, Video of the Day – Obamacare Architect Credits “Lack of Transparency” and “Stupidity of the American People” for Passage of Healthcare Law:
An architect of the federal healthcare law said last year that a “lack of transparency” and the “stupidity of the American voter” helped Congress approve ObamaCare.
He suggested that many lawmakers and voters didn’t know what was in the law or how its financing worked, and that this helped it win approval.
“Lack of transparency is a huge political advantage,” Gruber said. “And basically, call it the stupidity of the American voter or whatever, but basically that was really, really critical for the thing to pass.”
Although the mindset above clearly represents the Obama Administration’s opinion of the unwashed masses, it naturally went into damage control mode after Mr. Gruber’s comments went viral, insisting that the economist played only a very minor role in crafting and selling Obamacare. Similar to most things that come out of Obama’s mouth, this was a boldfaced lie.
The Wall Street Journal reports that:
Jonathan Gruber, the Massachusetts Institute of Technology economist whose comments about the health-care law touched off a political furor, worked more closely than previously known with the White House and top federal officials to shape the law, previously unreleased emails show.
The emails, provided by the House Oversight Committee to The Wall Street Journal, cover messages Mr. Gruber sent from January 2009 through March 2010. Committee staffers said they worked with MIT to obtain the 20,000 pages of emails.
The emails show frequent consultations between Mr. Gruber and top Obama administration staffers and advisers in the White House and the Department of Health and Human Services on the Affordable Care Act. They show he informed HHS about interviews with reporters and discussions with lawmakers, and he consulted with HHS about how to publicly describe his role.
The administration has sought to distance itself from the economist in the wake of his controversial statements in a 2013 video, where he said the health law passed because of the “huge political advantage” of the legislation’s lacking transparency. He also referred to the “stupidity of the American voter.”
Republicans seized on the comments as evidence that supporters of the law purposely misled the public about its costs. Mr. Gruber received nearly $400,000 from HHS for his work focusing on health-policy computer models, according to public records.
Cronyism pays very, very well in America.
The White House has described Mr. Gruber as having a limited role in crafting the law. President Barack Obama in 2014 said Mr. Gruber was “some adviser who never worked on our staff.” Mr. Gruber told Congress last year he disagreed with the widespread characterization of his role as the “architect” of Mr. Obama’s health-care plan.
“His proximity to HHS and the White House was a whole lot tighter than they admitted,” said Rep. Jason Chaffetz (R., Utah), chairman of the House oversight committee. “There’s no doubt he was a much more integral part of this than they’ve said. He put up this facade he was an arm’s length away. It was a farce.”
Mr. Chaffetz on Sunday sent a letter to HHS Secretary Sylvia Mathews Burwell requesting information justifying the department’s sole-source contract with Mr. Gruber for his work on the health law.
Mr. Gruber declined to comment.
One email indicates Mr. Gruber was invited to meet with Mr. Obama. In a July 2009 email, he wrote that Mr. Orszag had “invited me to meet with the head honcho to talk about cost control.”
“Thank you for being an integral part of getting us to this historic moment,” according to Sept. 9, 2009 email to Mr. Gruber from Jeanne Lambrew, a top Obama administration health adviser who worked at HHS and the White House. In a November 2009 email, she called Mr. Gruber “our hero.”
Mr. Gruber also informed HHS about interviews he had with health policy reporters such as Ezra Klein, previously of the Washington Post and now with Vox Media. In a November 2009 email, Mr. Gruber let a top HHS official know the conversation went well and the story would post soon.
Mainstream media on the case as usual.
In a Sept. 23, 2009, email, Mr. Gruber emailed Ms. Lambrew saying “pharma is going to be a huge winner from this bill—maybe $15 billion/year in incremental revenue. Any way to go after them harder for financing?”
You want to know who wasn’t a huge winner? The stupid American voter.
Here’s some proof:
Yep, You Guessed It – Obamacare Website Funneling Private Consumer Info to Private Companies
ObamaFraud: GAO Study Finds Almost All Fake Applicants are Approved for Subsidized ObamaCare
The Obama Administration is Forcing Insurance Companies to Keep Quiet About ObamaCare Problems
Woman Touted as Obamacare Success Story is Now Kicked Off Obamacare
Humana Warns of “‘Adverse ObamaCare Enrollment Mix”
Computer Security Expert Claims he Hacked the ObamaCare Website in 4 Minutes
Serfs Up – Average Healthcare Premiums Have Soared 39%-56% Post Obamacare
- US, China Deploy Cold War Code In Maritime Standoff As Pentagon Warns Of Chinese Air Threat
When last we checked in on China’s man-made island outposts in the South China Sea we got a glimpse of what life is like in the Spratlys. Here’s a visual that encapsulates how the politburo is attempting to spin Beijing’s land reclamation project:
Ridiculous propaganda aside, China has acknowledged that the islands serve a military purpose and if US intelligence is to be believed (which is always a dubious proposition, but we’ll leave that aside for now), Beijing has stationed artillery on the islands although it has since been either removed or concealed. The Pentagon continues to claim that China is threatening to disrupt sea lanes through which around $5 trillion in global trade passes each year. Additionally, US regional allies — who have overlapping maritime claims on the Spratlys — have eyed China’s activities nervously, with Philippine President Benigno Aquino going so far as to liken China to pre-war Nazi Germany.
Now, with the World War 3 calls getting louder, the US and China have deployed a code reminiscent of a system used during the Cold War that will hopefully help both sides avoid a “miscalculation” as the two countries are now expected to “meet more often.” Bloomberg has more:
The U.S. expects further encounters at sea with China’s navy, according to the captain of a U.S. coastal combat ship that has patrolled the disputed South China Sea and met a Chinese ship last month.
The countries have agreed codes to help understand each other and talk via radio, said Commander Rich Jarrett, commanding officer of the USS Fort Worth. The language used is similar to that used 20 years ago with the Soviet Union, the U.S.’ former Cold War foe, he said.
The Fort Worth deployed the codes when it unexpectedly met a Chinese vessel near the disputed Spratly islands during a May patrol of the South China Sea. It was the first time a U.S. littoral combat ship operated in waters around the islands, which are claimed by countries including China, the Philippines, Vietnam and Malaysia.
“I expect that we may have a similar encounter because we’re operating in this part of the world,” Jarrett said in an interview Monday on the ship moored on the Philippines’ Palawan island. “But quite honestly I’m not sure that I’m going to do anything particularly different than what I’ve done in previous deployments.”
Tensions in the South China Sea have risen with China warning planes and ships away from reefs where it is reclaiming land. A U.S. surveillance plane was repeatedly told by radio to divert from its path last month.
Meanwhile, the Pentagon says China is “rapidly closing the gap” between itself and the US in terms of air and space capabilities (which, incidentally, is just what you’d say if you wanted to campaign for increased military spending). Reuters has the story:
China is mounting a serious effort to challenge U.S. military superiority in air and space, forcing the Pentagon to seek new technologies and systems to stay ahead of its rapidly developing rival, Deputy Defense Secretary Robert Work said on Monday.
The Pentagon’s chief operating officer, speaking to a group of military and civilian aerospace experts, said China was “quickly closing the technological gaps,” developing radar-evading aircraft, advanced reconnaissance planes, sophisticated missiles and top-notch electronic warfare equipment.
While hoping for a constructive relationship with China, the Pentagon “cannot overlook the competitive aspects of our relationship, especially in the realm of military capabilities, an area in which China continues to improve at a very impressive rate,” he said.
China’s state-run news agency Xinhua late on Monday cited Xu Qiliang, a vice chairman of the powerful Central Military Commission, as saying China must innovate even more.
“Our military’s equipment construction is shifting from catch-up research to independent innovations,” Xu said.
Work made his remarks to the inaugural conference of the China Aerospace Studies Initiative, a partnership of the U.S. Air Force and the RAND Corporation think tank. The initiative aims to boost U.S. research on China’s aerospace ambitions.
As a reminder, China stacks up quite well militarily, especially in terms of sheer size:
* * *
Much as Washington and NATO are seemingly doing just about everything in their power to ensure that tensions continue to rise in Eastern Europe (right down to conducting war games specifically designed to replicate a Ukraine incursion), the Pentagon seems determined to view China’s activities in what it says are its own territorial waters and the country’s effor to modernize its armed forces as signs of aggression and with that in mind, we’ll close with the following from the Deputy Secretary:
Work, citing a Harvard study on rising powers confronting established powers, told the conference that interactions between the two often result in war. As a result, the Defense Department must “hedge against this international competition turning more heated.”
- The Instability Of The Global Game Of Central Bank Chicken
Submitted by Ben Hunt via Salient Partners' Epsilon Theory blog,
I was at a conference, on deck for a presentation, and I had the chance to listen to the Q&A for the speaker ahead of me.
“Assuming no external shock, how much longer can this bull market run?”
The speaker, not exactly the most sparkling of raconteurs under the best of circumstances, first replied with the obligatory, “well, that’s a very good question”, and then proceeded to give a detailed, bone-dry explication of exactly how long he thought this market would run, the likely level of the S&P 500 top, and a few winning sectors and stock picks for good measure. It all sounded very smart, and I’m sure he was … smart, that is. But boy oh boy, if there were ever a living embodiment of von Neumann’s dictum that being precise is all too often a waste of time, this was it.
Because this wasn’t “a very good question”. It was, in fact, a pretty useless question, the functional equivalent of asking a botanist how big a tree can grow in the absence of storms, droughts, fires, blights, lightning, insects, or whatever. Answer: pretty darn big. Better answer: who cares? You don't need my help with an investment strategy for a paradise scenario, any more than you need my help with an investment strategy for a doomsday scenario. But where we could all use some help is with an investment strategy for the Real World in-between paradise and doomsday. What we all need is a good perspective or vantage point for differentiating between this potential shock and that potential shock, for evaluating what signals to press and what signals to fade. It’s not a matter of predicting shocks, but rather a matter of reacting to incipient shocks smartly and strategically, of knowing, in the immortal words of Kenny Rogers, when to hold ‘em and when to fold ‘em. Now that’s a good question, and it’s one that Epsilon Theory is well suited to take on.
There’s a specific sort of instability in the world today – a game theoretic instability – which means that it has an identifiable pattern and rhythm you can understand in order to improve your investment strategy. It’s the instability of the game of Chicken, and once you start looking for it, you will see it everywhere here in the Golden Age of the Central Banker. Greece vs. the Troika? Chicken. Western sanctions on Russia over the Ukraine? Chicken. OPEC vs. US energy producers? Chicken. ECB vs. the Swiss National Bank? Chicken. Fed monetary policy communications to markets? Chicken. Abenomics? Chicken. US policy towards China? Chicken. ISIS vs. the world? Chicken.
Let me take a minute to describe why a game of Chicken is particularly and peculiarly unstable, because understanding the game’s dynamics is crucial for understanding how and why Chicken has become the defining strategic interaction of nations and institutions today, just as it was in the 1930s, the 1910s, and the 1870s. To make that description, I’ll be drawing on the concept of the Nash equilibrium, the most influential insight of mathematician John Nash, whose early career and lifelong struggle with mental illness was portrayed in the great movie “A Beautiful Mind”, and who was killed last month in a car accident at the age of 87 (I’d like to think that his not wearing a seatbelt while traveling on the New Jersey Turnpike was a game theoretic exercise, but that’s the Keats-ian Romantic in me talking).
The central idea of the Nash equilibrium is that a non-cooperative strategic interaction between players (for simplicity’s sake we’ll just talk about two player games, although the concept is applicable for any number of independent players) is in balance, i.e. in equilibrium, if neither player prefers to “move” from the current game position after consideration of both his preferences and potential moves AND his opponent’s preferences and potential moves AND the knowledge that both of you are thinking about the other in this manner. The Nash equilibrium takes seriously the notion that the other player is just as smart as you are and, as importantly, just as strategic as you are – meaning that both of you can look several moves ahead, and both of you are making moves that are contingent on the other player’s moves. Like all great ideas the Nash equilibrium seems simple at first blush, but it’s a deceptive simplicity, one that when applied rigorously can shed light on a raft of social interactions that otherwise seem irrational or unpredictable.
I’ll start with a common game that has a straightforward Nash equilibrium, the Prisoner’s Dilemma. I’ve written about this game in several prior notes, so I won’t go into detail here about its meaning. It’s just an example to explain the nomenclature. Below is the standard way of depicting a game between two players – in this case you and Al Capone – with each player having two behavioral choices – in this case Silence or Rat – and with the game payoffs in red for you and green for Al. The infamous Prisoner’s Dilemma outcome, where both you and Al rat on each other even though you both suffer more than you have to, is marked with the light blue oval and is the stable Nash equilibrium.
The Rat-Rat outcome is a Nash equilibrium because you don’t want to change from Rat behavior to Silence behavior (moving from the bottom right quadrant to the upper right quadrant) because your red payoff declines from -5 to -10. Ditto for Al Capone. He’s not changing his behavior from Rat to Silence (moving from the bottom right quadrant to the bottom left quadrant), as his green payoff would be worse for making the move. More interestingly, the Rat-Rat outcome is a highly predictable Nash equilibrium because no matter what quadrant or combination of behaviors you and Al start with, the game always ends up in the bottom right quadrant. Why? Because this is a non-cooperative game. Even if you and Al start in the happy upper left quadrant of Silence-Silence, where there is a +10 total utility to the shared outcome, there’s no way for Al to prevent you from choosing Rat behavior and boosting your personal payoff from +5 to +10. That wouldn’t be so bad in and of itself, but your choice to move from Silence to Rat is accompanied by Al’s payoff changing from +5 to -10, and that’s intolerable for him. So he decides to switch his behavior from Silence to Rat, to get out of what’s called the “sucker payoff” of the bottom left quadrant if that’s where you were planning to put him, or to put the sucker payoff of the upper right quadrant onto you if you were keeping your mouth shut after all. Of course, you are thinking about Al Capone in exactly the same way, and both of you know that both of you are thinking in this manner. All this combines to make the Rat-Rat outcome a very speedy equilibrium solution to the Prisoner’s Dilemma.
Now here’s the layout for the game of Chicken.
You and James Dean are each driving your car towards the cliff’s edge, but unfortunately for both you and James there isn’t a single Nash equilibrium for this game. Obviously it’s disastrous for both of you to stay in the lower right quadrant where you’re both dead and leaving behind pretty corpses. But why should you stop your car and enter the stable but embarrassing Nash equilibrium of the upper right quadrant (-10 for you, +10 for him) when it would be just as easy for James Dean to stop his car and move both of you into the far more enjoyable and just as stable Nash equilibrium of the lower left quadrant? A game of Chicken has two Nash equilibria, each just as likely as the other, each just as “natural” an outcome as the other. This is the inherent vice of the game of Chicken – it is impossible to predict the outcome of the game by looking at the fundamentals of the game. It is inherently unpredictable – not because we don’t know enough facts about the situation or because we’re not smart enough to analyze the situation – but because it is the mathematical nature of this particular beast.
I’m often asked what I think the outcome of the negotiations between Greece and the Troika will turn out to be. Will Greece leave the Euro and default on its debt? Will Germany blink? And when I answer the question by saying that I don’t know, I can feel the disappointment. Don’t you even have an opinion, Ben? You seem to know a lot of the facts here, or at least you talk a good game about domestic Greek politics and multi-level game-playing. What good is game theory and all your knowledge if you can’t even handicap the odds of a Greek default?
Game theory is useful precisely because it tells me that there is no fundamentals-based or structural methodology to handicap the odds of a Greek default! Sometimes the answer to a mathematical question is the same as the answer to a prayer or the answer to a Magic 8 Ball: NO. There is no greater understanding possible here through the use of science and mathematics. To paraphrase Von Neumann again, get used to it.
In my stump speech about investing in the Golden Age of the Central Banker, I always start by making the distinction between decisions under risk and decisions under uncertainty. In a decision under risk, you know the possible outcomes of a decision and you have a rough sense of the probabilities to associate with those outcomes. In a decision under uncertainty, you either don’t know the possible outcomes or it’s impossible to assign meaningful probability distributions to those outcomes. What’s at stake in the distinction between the two? All of modern portfolio theory and all of mainstream macroeconomic theory and all of econometric modeling – ALL of it – is based on the assumption that everyone in the world is making decisions under risk. Violate that assumption – an assumption that is as deeply buried and indecipherably written within the edifice of academic economics today as the assumption that “a nationwide decline in home prices is impossible” was deeply buried and indecipherably written within the edifice of $10 trillion worth of residential mortgage-backed securities in 2008 – and your portfolio risk analysis suddenly has a hole big enough to drive a truck through. Game theory provides a perspective and a toolkit to distinguish between decisions under risk and decisions under uncertainty. It can’t work miracles by predicting the outcome of something that’s inherently unpredictable, but it can identify the situations that are unpredictable and suggest coping mechanisms for dealing with them. And that’s a lot. It can also highlight the situations where you have made a category error, where you have a misplaced confidence in your existing risk management toolkit or perspective. And that’s a lot, too.
So what does determine the outcome of a game of Chicken? Surely it’s not just a random outcome? Well, no, it’s not random, but you’re not going to like the answer I have for you any better. The game of Chicken is not a test of power and capabilities. It is a test of will. It is governed by constructed signals of resolve, control, and – occasionally – lack of control. It is governed by Narratives, particularly by political Narratives when the game is played on an international stage. Cooler heads rarely prevail in a game of Chicken, even if they’re objectively the stronger player. Because we’re all smart enough to know how to play the game, and because we know that the other players are going around and around in their heads trying to figure it out just like we are, the game of Chicken breeds insecurity, doubt, and miscalculation like no other. Play the game enough times and it will break you. It’s un-insurable, plagued by inherent vice, and that means that it’s un-investable, too.
I promised that game theory could provide some coping mechanisms for dealing with technically uncertain (as opposed to merely risky) investment or policy environments, and I’ll write briefly about three in this note. The first two are methods for gauging which equilibrium the game of Chicken is moving towards by evaluating the relative strength of the competing player Narratives. The third is a more general observation about gameplay and timing.
First, watch for acceleration and deceleration in behaviors, not absolute levels of speed. Technically speaking, second derivatives are always more influential than first derivatives as signaling devices because they contain more information (data that makes you change your mind; see “Sometimes A Cigar is Just a Cigar” for a primer on Information Theory), and third derivatives are even more powerful. More colloquially, it’s not whether your car is going faster than James Dean’s, it’s whether you are accelerating your speed more than James is accelerating his speed. Better yet, it’s whether you start to accelerate at a faster rate than you were a second ago. Remember, the game of Chicken is all about intentions and willpower, not capabilities and structure, and pressing down on the gas pedal is the only structural (or to use a $10 word, endogenous) method of communicating those intentions.
Three quick examples of the primacy of change (and change of change) in determining market outcomes in Chicken environments:
- What was the Fed Narrative that brought markets back from the abyss in the spring and summer of 2009? Answer: “green shoots” – the notion that even though the US and global economy were still declining, they were getting worse at a decelerating rate.
- What was the market reaction to Bernanke’s summer of 2013 Narrative that the Fed was not going to put on the brakes, but they were going to “ease off the accelerator” a bit? Answer: Taper Tantrum – a sharp decline in almost all asset classes in almost every market around the world, as investors reacted to the change in intentions signaled by the Fed (for more on this, see one of my first Epsilon Theory notes, “2 Fast 2 Furious”).
- Now fast forward to today and ask yourself why we are NOT seeing a similar sell-off in global markets as the Fed very publicly goes about its business of preparing to raise short rates. Answer: because from a second derivative perspective putting on the brakes is the same thing as taking your foot off the accelerator. Deceleration is deceleration; you’re just crossing the zero-line when you put your foot on the brake. There is no essential change in intentions from the Taper Tantrum to today, and that’s why this Narrative-dominated market continues to set new highs.
Second, watch for self-binding behaviors, particularly suicidal self-binding behaviors. These are very powerful Narratives for signaling intentions, and they are variations of the classic Chicken-winning strategies of ripping your brakes or steering wheel out of the car, or acting so crazy that your opponent believes that you prefer death to defeat.
By suicidal self-binding behaviors I mean politically suicidal, like John Boehner’s go-to move in negotiations with the White House, where he “has no choice” but to take a hard line or else face a revolt from the Republican caucus, but I also mean physically suicidal. And before you say that this is only something that ISIS jihadists would do, consider that last week the US Defense Department floated a trial balloon in The New York Times saying that they were considering moving up to 5,000 US troops into Baltic and Eastern European countries. Now the press articles emphasized all the tanks and equipment that would be pre-positioned there, making it seem as if this would be a very potent fighting force, ready to take on a new Evil Empire if one materialized from Moscow. Please. These soldiers would be in Eastern Europe for exactly the same reason we stationed US soldiers in West Berlin during the Cold War: they are there to die. In the event of a Russian attack, their job is to be killed so that the resulting hue and cry would guarantee an all-out NATO military response. Sorry, but it’s true. It’s a classic “tripwire” strategy, and the thing about tripwires is that they have to be broken in order to work. Of course, the Russians know exactly what the moves are here, which makes them less likely to engage in full-frontal military actions in the first place, which is exactly the Pentagon’s goal. It’s an effective way of playing the game of deterrence, which is a form of Chicken, but less effective and more risky the deeper you place the tripwire into Russia’s sphere of influence. Color me nervous. Really, I don’t see how the game is worth the candle here.
On the flip side of the self-binding spectrum, intentional ambiguity can also be a very effective strategy for playing Chicken, particularly if you’re starting from a structurally stronger position than your opponent. What is not effective at all, however, is to switch back and forth between ambiguity and self-binding, as we have seen from time to time with the Fed (data dependence versus strong forward guidance) and constantly with this White House, particularly in its foreign policy.
Third, there is one redeeming quality about the game of Chicken – it takes a long time to play. Unlike the Prisoner’s Dilemma, where you typically get to the single Nash equilibrium so fast it makes your head spin (and usually too quickly to react effectively in your portfolio), Chicken players tend to have a mutual interest in pushing back the day of reckoning as much as they can. That’s because no matter how confident you are that you’re “winning” with your clever signals and Narratives, neither your true will nor your opponent’s true will are knowable or observable directly. Chicken is a game played through a glass, darkly. It’s ultimately as unpredictable for the players as it is for investors, and if there’s one group that hates unpredictability even more than professional investors it’s professional politicians.
The upshot of all this for investors is two-fold:
- Take your time in dis-engaging from the game. Yes, a game of Chicken is inherently unpredictable and hence inherently un-investable, but you have plenty of time to exit. Moreover, the passage of time can often make the ultimate car crash much less painful. For example, while a Greek default and Euro exit will spark trouble no matter when it occurs, it’s absolutely less destabilizing today with most of the debt in the hands of the Troika than three years ago when that debt was spread all over the private banking sector.
- Don’t freak out on any individual signal or Missionary statement, but don’t ring the all-clear bell, either. Because Chicken is a game of constructed signals and Narratives signifying hidden will and intentions, there’s almost always “room” for players to volley market-moving statements back and forth, regardless of the objective or structural characteristics at hand. In other words, it is virtually impossible for a single signal to push the outcome into either Nash equilibrium. When does time run out in a game of Chicken? When you see competing Narratives of “we have no choice” you’ve entered the death spiral phase of the game. That’s when it’s time to head for the hills, and quickly.
I’ll close this note with the same line that I find myself using over and over again. The Golden Age of the Central Banker is a time for investment survivors, not investment heroes, and the ubiquity of inherently unstable games of Chicken is a big reason for that advice. There’s no shame in picking your battles, in recognizing what’s investable and what’s not. There’s also no reason to panic. But it’s not easy to make that differentiation if you’re looking at an uncertain world through risk-colored glasses. Time for a new set of lenses, one that takes seriously the patterns of strategic interaction and behavioral dynamics that rocked the world in the 1870s, the 1910s, the 1930s, and … I suspect … the years immediately ahead of us.
- The Fattening Of America: Obesity Rates Hit Record High, Doctors Blame Cars & Poverty
74% of American men are either overweight or Obese (up from 63% in 1994) according to a new report using data from the National Health and Nutrition Examination Survey.
As MSN reports, the researchers exclaim "obesity is not getting better. It's getting worse, and it's really scary. It's not looking pretty," warning that America's "car dependence" and poverty ("processed and fast foods are less expensive") are to blame and America's weight problem is an issue that will not be resolved through a purely medical solution.
As MSN reports, fewer than one-third of Americans are currently at a healthy weight, with the rest of the population either overweight or obese, a new report finds.
About 35 percent of men and 37 percent of women are obese. Another 40 percent of men and 30 percent of women are overweight, researchers said in the June 22 issue of JAMA Internal Medicine.
"Obesity is not getting better. It's getting worse, and it's really scary. It's not looking pretty," said Lin Yang, a postdoctoral research associate at Washington University School of Medicine in St. Louis.
The new obesity figures did not come as a surprise to Dr. Elliott Antman, president of the American Heart Association.
"It's in line with what we already knew, and it provides some numbers on the magnitude of the problem," Antman said of the new study. "It puts a face on the issue, and it's a significant problem."
Obesity is related to increases in diabetes, high blood pressure and elevated cholesterol, "all of which converge on an increased risk of heart disease and stroke," he said.
America's weight problem is an issue that will not be resolved through a purely medical solution, Yang and Antman said. Politicians and officials at the federal, state and local levels will need to weigh in with policies that increase the number of calories people burn and decrease the amount of unhealthy foods they ingest.
For example, communities need to adopt plans that will make it easier for people to get around on foot or riding a bike, rather than sitting in a car, Yang said.
"America is a very much car-dependent country. We know car driving is a chunk of sedentary behavior," she said. "More walking or bicycling would increase the physical activity of the whole nation."
Policymakers also need to find ways to improve the availability of inexpensive, healthy food, Antman said. Right now, processed food and fast food that is high in unhealthy sugar, salt and fat tends to be more affordable and available in America's communities than healthier options.
"Fast foods are less expensive, so that individuals trying to feed a large family might tend to purchase them rather than fresh foods, which are harder to find and more expensive, and therefore less economically appealing," he said.
* * *
* * *
But more cars and cheaper costs for crappy food is great for the stock market, right?
* * *
We leave it to the report's doctors to conclude – rather stunningly…
"This generation of Americans is the first that will have a shorter life expectancy than the previous generation, and obesity is one of the biggest contributors to this shortened life expectancy because it is driving a lot of chronic health conditions," she said.
- Confederate Flag Sales Soar Despite Populist Removal Of Merchandise
Following the removal of Confederate Flag merchandise from WalMart; Sears, Ebay, ETSY, and prominent flag maker Valley Forge Flags have all joined the 'movement' and stopped selling the 'controversial' flag. However, as with any and all government-'suggested' actions, there are unintended consequences in the hypocrisy of implicitly banning this symbolic banner… sales of Confederate Flags are soaring everywhere else (as the "guns and ammo"-like threat of scarcity has led to a run on the products).
Alotta Signs of Sparks, Nev., typically sells about five Confederate flags per week. On Monday, however, 46 orders came in. Then South Carolina Gov. Nikki Haley called for removing the stars and bars from her state's capitol grounds. The next morning, Alotta Signs logged 200 orders for Confederate flags, most of them through Amazon (AMZN). “We don’t even have the lowest price,” says Dave Pearson, owner and president of the company. “It’s nuts.”
The threat of scarcity often leads to a run on products — such as guns, with sales typically spiking when there's talk of tightening regulations after mass shootings. And that appears to be the case for the Confederate flag, now under assault in the aftermath of the murder of nine worshippers at Emanuel African Methodist Episcopal Church in Charleston.
Many politicians who had defended the right of southern states to fly the flag changed their minds and said it should be relegated to museums. Walmart (WMT) and Sears (SHLD) said they would no longer sell Confederate flag merchandise.
But other retailers are benefiting from the controversy.
On Monday, before Haley announced her change in position on the flag (which still must be approved by the state assembly), Amazon listed two Confederate flags among the 60 bestselling items under “Outdoor Flags and Banners”: one at the No. 5 spot, and one at No. 43. The following morning, five of the top 20 bestsellers in the category were Confederate flags, including the No. 1 bestseller, a 3-by-5 foot polyester model made by Rhode Island Novelty and sold by a company called Anley. Among the top 60, 12 were versions of the Confederate flag.
Alotta’s flag, a 3-by-5 nylon embroidered model that sells for $13.95 plus $6.25 shipping (and is not eligible for Amazon’s free-shipping service, Prime) was the No. 7 bestseller as of midday Tuesday. So the sales spike for higher-ranking flags has probably been even greater than for Alotta’s product.
Sellers on eBay (EBAY) seem to be experiencing a similar surge in interest. At about 10 a.m. EST on Tuesday, a confederate flag listed by a seller named superqualityflags showed 149 sold in the last 24 hours. By 11 a.m., 201 had been sold in the last 24 hours.
EBay has since said it will prohibit sales of Confederate flags, joining Walmart and Sears. "We believe it has become a contemporary symbol of divisiveness and racism," the company said in a statement. Amazon didn't respond for this article.
Civil rights advocates may be disheartened by what appears to be a show of solidarity with Roof and other white supremacists, but southerners often point out that pride in the stars and bars has nothing to do with racism. Instead, for many, it signifies respect for the Confederate soldiers who fought for their homeland during the Civil War, including hundreds of thousands who perished.
* * *
We leave it to The Burning Platform's Jim Quinn to explain the hypocrisy of banning The Confederate Flag…The Civil War was fought over State’s Rights! The Civil War was fought over Slavery! The Civil War was fought cus’ crackas was tryin’ to keep a brotha down! What a load of horseshit!
The Civil War was ignited politically because of the State’s Right to secede and the preservation of the institution of slavery . It is not a one versus the other debate. They were both the cause of the Civil War but that is not why the war was fought. The Civil War was fought because the North and the South were radically different. The old wounds never completely healed because the North and the South STILL have different cultures and economies.
As Americans we can all have a McDonald’s and Walmart in every town but different regions of the country will still see the world differently. The division of the North and South is still apparent in every election when half the country votes for the Blue team and the other half votes for the Red team.
As a Southerner I hold the Stars and Bars in the same high esteem as the Stars and Stripes. As a resident of Alabama I consider myself a current citizen of Alabama above being a citizen of the United States. As a native Texan I consider myself a citizen of the Lone Star State above being a current citizen of Alabama above being a citizen of the United States.
This is what State’s Rights means to me. Being a citizen of a individual State above being a citizen of the collective States. The United States was originally founded as a confederacy. A confederacy is defined as a collection of states for the common action of similar states.
It wasn’t until after the American Revolution the Articles of Confederation was replaced with the Constitution under a stronger influence of the Federal Government. This changed the country into a Federalist system while many Southern states from the Revolutionary War wanted to remain a Confederation.
The debate of the importance of the Federal Government is still ongoing and creating a new divide. By being a citizen of the United States I am automatically a participant in the Federalist system. The Federal Government rules over every State and the power is concentrated in the hands of 535 people. Considering the United States is inhabited by over 300,0000,000 citizens this concentration of power is going to create a new divide over the role of the Federal Government.
Except this time we doubt it is solely the Southern state who want to return to a confederacy and limit the role of the Federal Government.
* * *
One final thought – it seems no one had any major problems with The Confederate Flag until some nutjob kills less people than die in Chicago every Friday night. Populist policy-setting by Lowest Common Denominator appears to be the nanny-state's new normal.
- Fed Shocked That Warm Weather Did Not Lead To A Consumption Surge
Blaming the weather has become such a popular strategy for explaining away poor economic data that calling attention to the PhDs and Wall Street analysts who employ it in a desperate attempt to perpetuate the US economic recovery myth has almost lost its comedic value… almost.
But not quite.
Which is why we found it particularly amusing that the NY Fed — and this is the same NY Fed that recently called the San Francisco Fed’s Steve Liesman-assisted residual seasonality coup a “myth” — admits that “real consumption expenditures have yet to show signs of a significant pickup from a slowdown in winter.” “Growth has been tepid,” the NY Fed research team notes, “despite better weather.”
So our only question is this: with winter and all the cold weather, snow, and ice that economists are always shocked to see accompanying it just five months away, how is it possible that the Fed will be able to start raising rates in December?
Or, summarized…
Digest powered by RSS Digest
Saving...