Today’s News June 25, 2015

• Iconic Dukes of Hazzard Car 'General Lee' Stripped Of Confederate Flag: "This Is A New Level Of P.C. Idiocy"

  Submitted by Mac Slavo via SHTFPlan.com,

  

  They’ve been pushing for it for over 150 years and this year the politically correct anti-Confederate flag movement may have finally achieved its ultimate goal. Following a racially driven shooting spree that left nine people dead at a church in Charleston, the governor of South Carolina is pushing legislation to have the flag removed at any government buildings where it currently flies. In Alabama, the governor has ordered Confederate flag “paraphernalia” removed from the Confederate Memorial Monument.

  Major retailers like Amazon, Ebay, and Walmart immediately jumped on board and have now removed confederate flags from their listings. Paul Joseph Watson highlights the sheer ridiculousness of the move, noting that while Amazon has removed memorabilia featuring the flag of the Confederacy, they continue to allow the sale of items featuring Nazi emblems and Swastikas.

  But the idiocy, based on absolutely no logical reasoning except that this is the perfect crisis to not let go to waste, doesn’t stop there.

  Warner Bros. has announced that it has halted production of toys and replicas of the iconic Dukes of Hazzard sports car known as the General Lee.

  Dukes of Hazzard, a staple TV show of the early 1980’s, featured what may possibly be the most popular and most recognizable car in American history.

  As of today, that car will no longer feature the confederate flag on its roof.

  The Confederate flag may or may not be removed from government buildings in South Carolina, but the relic is definitely being removed from at least one southern icon. Warner Bros. today announced that it was halting production of toys and replicas of the General Lee, the car from the Dukes of Hazzard, which famously bore the flag on its roof.

   

  …

   

  As recently as 2012 Warner Bros. quashed rumors that it was planning to remove the Confederate flag from toy versions of the General Lee. “We were not and are not planning to change design of the General Lee on merchandise,” the company said at the time, after a Tomy sales representative reportedly indicated production would cease in 2013.

  Ben Jones, who played good ‘ol boy Cooter on the show and had a crush on leading lady Daisy Duke, responded to the removal of the flag, echoing the general sentiment of many Americans who find the move by major retailers and political leaders to be overkill:

  Some unnamed genius at the company feels that the flag is ‘offensive to some’ and therefore it has no business on a classic TV comedy about a bunch of good ol’ boys and girls in the Southern mountains

   

  This is a new level of ‘P.C.’ idiocy. I don’t know about you, but I am tired of being insulted by morons.

  

  Cooter (far right) poses with Bo Duke, Luke Duke and The General Lee

  We’re sure that the next crisis will lead to the complete removal of any references to the South’s involvement in the Civil War, including the removal of the very name of the vehicle, The General Lee, named after the man who led the South’s armies against the north.

  No proposed names have yet been put forth, but some politically correct replacements may include:

  • The General Grant
  • The General Sharpton
  • The General Obama
  • and, since the iconic car may now openly identify as being more feminine than masculine, The General Pelosi has kind of a ring to it.

  Listen to The General Lee’s racially divisive Dixie Horn before it gets removed from the internet forever:

  

  

  
  
  

  

• 600 Years Of Global War & Peace

  For around 500 years, war (and the deaths from them) were pretty consistently awful. Then as we entered the 20th century the military and civilian death rate soared as the world fought through two world wars. Since then, despite the headlines, deaths and wars have tailed off dramatically… until the last decade that is – which has seen the trend change significantly. With Soros among the many worried about World War 3, we suspect the current dip will be nothing but a positive outlier in history.

   

  

   

  As Vox concludes,

  A recent paper, by Nassim Nicholas Taleb and Pasquale Cirillo, argued that our current peaceful era was a statistical myth: that dips in war deaths should be expected, as Roser’s chart shows, and that there’s no reason to believe this time should be different.

   

  Pinker and others argue, by contrast, that things really have changed: that the rise of democracy, capitalism, industrial civilization, and international institutions like the UN have radically transformed the way global politics operates.

   

  It’s impossible to know who’s right for sure. But Roser’s chart makes clear that, whatever the reason, we should be counting our blessings today.

  Source: MaxRoser at OurWorldInData

  

  

  
  
  

  

• What's Really Going On At Fukushima?

  Submitted by Robert Hunziker via CounterPunch.org,

  Fukushima’s still radiating, self-perpetuating, immeasurable, and limitless, like a horrible incorrigible Doctor Who monster encounter in deep space.

  Fukushima will likely go down in history as the biggest cover-up of the 21st Century. Governments and corporations are not leveling with citizens about the risks and dangers; similarly, truth itself, as an ethical standard, is at risk of going to shambles as the glue that holds together the trust and belief in society’s institutions. Ultimately, this is an example of how societies fail.

  Tens of thousands of Fukushima residents remain in temporary housing more than four years after the horrific disaster of March 2011. Some areas on the outskirts of Fukushima have officially reopened to former residents, but many of those former residents are reluctant to return home because of widespread distrust of government claims that it is okay and safe.

  Part of this reluctance has to do with radiation’s symptoms. It is insidious because it cannot be detected by human senses. People are not biologically equipped to feel its power, or see, or hear, touch or smell it (Caldicott). Not only that, it slowly accumulates over time in a dastardly fashion that serves to hide its effects until it is too late.

  Chernobyl’s Destruction Mirrors Fukushima’s Future

  As an example of how media fails to deal with disaster blowback, here are some Chernobyl facts that have not received enough widespread news coverage: Over one million (1,000,000) people have already died from Chernobyl’s fallout.

  Additionally, the Rechitsa Orphanage in Belarus has been caring for a very large population of deathly sick and deformed children. Children are 10 to 20 times more sensitive to radiation than adults.

  Zhuravichi Children’s Home is another institution, among many, for the Chernobyl-stricken: “The home is hidden deep in the countryside and, even today, the majority of people in Belarus are not aware of the existence of such institutions” (Source: Chernobyl Children’s Project-UK).

  One million (1,000,000) is a lot of dead people. But, how many more will die? Approximately seven million (7,000,000) people in the Chernobyl vicinity were hit with one of the most potent exposures to radiation in the history of the Atomic Age.

  The exclusion zone around Chernobyl is known as “Death Valley.” It has been increased from 30 to 70 square kilometres. No humans will ever be able to live in the zone again. It is a permanent “dead zone.”

  Additionally, over 25,000 died and 70,000 disabled because of exposure to extremely dangerous levels of radiation in order to help contain Chernobyl. Twenty percent of those deaths were suicides, as the slow agonizing “death march of radiation exposure” was too much to endure.

  Fukushima- The Real Story

  In late 2014, Helen Caldicott, M.D. gave a speech about Fukushima at Seattle Town Hall (9/28/14). Pirate Television recorded her speech; here’s the link: https://www.youtube.com/watch?v=4qX-YU4nq-g

  Dr. Helen Caldicott is co-founder of Physicians for Social Responsibility, and she is author/editor of Crisis Without End: The Medical and Ecological Consequences of the Fukushima Nuclear Catastrophe, The New Press, September 2014. For over four decades Dr. Caldicott has been the embodiment of the anti-nuclear banner, and as such, many people around the world classify her as a “national treasure”. She’s truthful and honest and knowledgeable.

  Fukushima is literally a time bomb in quiescence. Another powerful quake and all hell could break loose. Also, it is not even close to being under control. Rather, it is totally out of control. According to Dr. Caldicott, “It’s still possible that Tokyo may have to be evacuated, depending upon how things go.” Imagine that!

  According to Japan Times as of March 11, 2015: “There have been quite a few accidents and problems at the Fukushima plant in the past year, and we need to face the reality that they are causing anxiety and anger among people in Fukushima, as explained by Shunichi Tanaka at the Nuclear Regulation Authority. Furthermore, Mr. Tanaka said, there are numerous risks that could cause various accidents and problems.”

  Even more ominously, Seiichi Mizuno, a former member of Japan’s House of Councillors (Upper House of Parliament, 1995-2001) in March 2015 said: “The biggest problem is the melt-through of reactor cores… We have groundwater contamination… The idea that the contaminated water is somehow blocked in the harbor is especially absurd. It is leaking directly into the ocean. There’s evidence of more than 40 known hotspot areas where extremely contaminated water is flowing directly into the ocean… We face huge problems with no prospect of solution.” (Source: Nuclear Hotseat #194: Fukushima 4^th Anniversary – Voices from Japan, March 10, 2015, http://www.nuclearhotseat.com/2468/)

  At Fukushima, each reactor required one million gallons of water per minute for cooling, but when the tsunami hit, the backup diesel generators were drowned. Units 1, 2, and 3 had meltdowns within days. There were four hydrogen explosions. Thereafter, the melting cores burrowed into the container vessels, maybe into the earth.

  According to Dr. Caldicott, “One hundred tons of terribly hot radioactive lava has already gone into the earth or somewhere within the container vessels, which are all cracked and broken.” Nobody really knows for sure where the hot radioactive lava resides. The scary unanswered question: Is it the China Syndrome?

  Following the meltdown, the Japanese government did not inform people of the ambient levels of radiation that blew back onto the island. Unfortunately and mistakenly, people fled away from the reactors to the highest radiation levels on the island at the time.

  As the disaster happened, enormous levels of radiation hit Tokyo. The highest radiation detected in the Tokyo Metro area was in Saitama with cesium radiation levels detected at 919,000 becquerel (Bq) per square meter, a level almost twice as high as Chernobyl’s “permanent dead zone evacuation limit of 500,000 Bq” (source: Radiation Defense Project). For that reason, Dr. Caldicott strongly advises against travel to Japan and recommends avoiding Japanese food.

  Even so, post the Fukushima disaster, Secretary of State Hillary Clinton signed an agreement with Japan that the U.S. would continue importing Japanese foodstuff. Therefore, Dr. Caldicott suggests people not vote for Hillary Clinton. One reckless dangerous precedent is enough for her.

  According to Arnie Gundersen, an energy advisor with 39 years of nuclear power engineering experience, as reported in The Canadian on August 15, 2011: “The US government has come up with a decision at the highest levels of the State Department, as well as other departments who made a decision to downplay Fukushima. In April, the month after the powerful tsunami and earthquake crippled Japan including its nuclear power plant, Hillary Clinton signed a pact with Japan that she agreed there is no problem with Japanese food supply and we will continue to buy them. So, we are not sampling food coming in from Japan.”

  However, in stark contrast to the United States, in Europe Angela Merkel, PhD physics, University of Leipzig and current chancellor of Germany is shutting down all nuclear reactors because of Fukushima.

  Maybe an advanced degree in physics makes the difference in how a leader approaches the nuclear power issue. It certainly looks that way when comparing/contrasting the two pantsuit-wearing leaders, Chancellor Merkel and former secretary of state Clinton.

  After the Fukushima blow up, ambient levels of radiation in Washington State went up 40,000 times above normal, but according to Dr. Caldicott, the U.S. media does not cover the “ongoing Fukushima mess.” So, who would really know?

  Dr. Caldicott ended her speech on Sept. 2014 by saying: “In Fukushima, it is not over. Everyday, four hundred tons of highly radioactive water pours into the Pacific and heads towards the U.S. Because the radiation accumulates in fish, we get that too. The U.S. government is not testing the water, not testing the fish, and not testing the ambient air. Also, people in Japan are eating radiation every day.”

  Furthermore, according to Dr. Caldicott: “Rainwater washes over the nuclear cores into the Pacific. There is no way they can get to those cores, men die, robots get fried. Fukushima will never be solved. Meanwhile, people are still living in highly radioactive areas.”

  Fukushima will never be solved because “men die” and “robots get fried.” By the sounds of it, Fukushima is a perpetual radiation meltdown scenario that literally sets on the edge of a bottomless doomsday pit, in waiting to be nudged over.

  UN All-Clear Report

  A UN (UNSCEAR) report on April 2, 2014 on health impacts of the Fukushima accident concluded that any radiation-induced effects would be too small to identify. People were well protected and received “low or very low” radiation doses. UNSCEAR gave an all-clear report.

  Rebuttal of the UNSCEAR report by the German affiliate of the International Physicians for the Prevention of Nuclear War d/d July 18, 2014 takes a defiant stance in opposition to the UN report, to wit: “The Fukushima nuclear disaster is far from over. Despite the declaration of ‘cold shutdown’ by the Japanese government in December 2011, the crippled reactors have not yet achieved a stable status and even UNSCEAR admits that emissions of radioisotopes are continuing unabated. 188 TEPCO is struggling with an enormous amount of contaminated water, which continues to leak into the surrounding soil and sea. Large quantities of contaminated cooling water are accumulating at the site. Failures in the makeshift cooling systems are occurring repeatedly. The discharge of radioactive waste will most likely continue for a long time.”

  “Both the damaged nuclear reactors and the spent fuel ponds contain vast amounts of radioactivity and are highly vulnerable to further earthquakes, tsunamis, typhoons and human error. Catastrophic releases of radioactivity could occur at any time and eliminating this risk will take many decades… It is impossible at this point in time to come up with an exact prognosis of the effects that the Fukushima nuclear disaster will have on the population in Japan… the UNSCEAR report represents a systematic underestimation and conjures up an illusion of scientific certainty that obscures the true impact of the nuclear catastrophe on health and the environment.”

  To read the full text of the rejoinder to the UN report, go to: https://japansafety.wordpress.com/tag/saitama/

  Fukushima’s Radiation and the Future

  Mari Yamaguchi, Associated Press (AP), June 12, 2015: “Four years after an earthquake and tsunami destroyed Japan’s Fukushima nuclear power plant, the road ahead remains riddled with unknowns… Experts have yet to pinpoint the exact location of the melted fuel inside the three reactors and study it, and still need to develop robots capable of working safely in such highly radioactive conditions. And then there’s the question of what to do with the waste… serious doubts about whether the cleanup can be completed within 40 years.”

  “Although the Chernobyl accident was a terrible accident, it only involved one reactor. With Fukushima, we have the minimum [of] 3 reactors that are emitting dangerous radiation. The work involved to deal with this accident will take tens of years, hundreds of years,” Prof. Hiroaki Koide (retired), Kyoto University Research Reactor Institute, April 25, 2015. “It could be that some of the fuel could actually have gone through the floor of the containment vessel as well… What I’ve just described is very, very logical for anyone who understands nuclear engineering or nuclear energy,” which dreadfully spells-out: THE CHINA SYNDROME.

  According to the Smithsonian, April 30, 2015: “Birds Are in a Tailspin Four Years After Fukushima: Bird species are in sharp decline, and it is getting worse over time… Where it’s much, much hotter, it’s dead silent. You’ll see one or two birds if you’re lucky.” Developmental abnormalities of birds include cataracts, tumors, and asymmetries. Birds are spotted with strange white patches on their feathers.

  Maya Moore, a former NHK news anchor, authored a book about the disaster: The Rose Garden of Fukushima (Tankobon, 2014), about the roses of Mr. Katsuhide Okada. Today, the garden has perished: “It’s just poisoned wasteland. The last time Mr. Okada actually went back there, he found baby crows that could not fly, that were blind. Mutations have begun with animals, with birds.”

  The Rose Garden of Fukushima features a collection of photos of an actual garden that existed in Fukushima, Japan. Boasting over 7500 bushes of roses and 50-thousand visitors a year, the Garden was rendered null and void in an instant due to the triple disaster — earthquake, tsunami, and meltdown.

  The forward to Maya’s book was written by John Roos, former US Ambassador to Japan 2009-13: “The incredible tale of Katz Okada and his Fukushima rose garden was told here by Maya Moore… gives you a small window into what the people of Tohoku faced.”

  Roos’ “small window” could very well serve as a metaphor for a huge black hole smack dab in the heart of civilization. Similarly, Fukushima is a veritable destruction machine that consumes everything in its path, and beyond, and its path is likely to grow. For certain, it is not going away.

  Thus, TEPCO (Tokyo Electric Power Company) is deeply involved in an asymmetric battle against enormously powerful unleashed out-of-control forces of E=mc².

  Clearly, TEPCO has its back to the wall. Furthermore, it’s doubtful TEPCO will “break the back of the beast.” In fact, it may be an impossible task.

  Maybe, just maybe, Greater Tokyo’s 38 million residents will eventually be evacuated. Who knows for sure?

  Only Godzilla knows!

   

  

  

  
  
  

  

• The Republivenn Diagrams

  The Republicans’ five-ring circus…

   

  

   

  Source: Five-Thirty-Eight

  

  

  
  
  

  

• A $300 Million Layover: CYNK Mastermind Arrested After Phoenix Diversion

  Submitted by Daniel Drew via Dark-Bid.com,

  

  In what is probably the most expensive layover in history, Gregg Mulholland's international flight from Canada to Mexico turned tragic for him when his plane made a stop at Phoenix Sky Harbor International Airport on Tuesday. In an arrest that sounds like a scene straight out of Catch Me If You Can, the FBI finally closed the book on a story that began last July.

  Mulholland took a page from The Wolf of Wall Street playbook when he turned CYNK Technologies into a $5 billion company. Mulholland made $300 million in illicit profits.

  

  Let's review the company's fundamentals: no assets, no income, one employee. In fact, Mulholland makes Jordan Belfort look like an amateur. Traders who tried to short sell CYNK got steamrolled and lost their jobs when they got squeezed in relentless rallies. Now, Mulholland is the one getting squeezed by FBI agents in Sky Harbor.

  The FBI reports,

  To facilitate these interrelated schemes, the complaint charges that the Mulholland Group used shell companies in Belize and Nevis, West Indies, which had nominees at the helm. This structure was designed to conceal the Mulholland Group's ownership interest in the stock of U.S. public companies, in violation of U.S. securities laws, and enabled the Mulholland Group to engage in numerous "pump and dump" schemes. This structure enabled the Mulholland Group to manipulate the stock of Cynk Technology Corp, which traded on the U.S. OTC markets under the ticker symbol CYNK. Using aliases such as "Stamps" and "Charlie Wolf," Mulholland was intercepted on a court-authorized wiretap in May 15, 2014, admitting to his ownership of "all the free trading" or unrestricted shares of CYNK.

  Today's Lesson: If you ever find yourself with $300 million in illegal gains, don't fly commercial.

  

  

  
  
  

  

• Auto Loans In "Untested" Territory Blackstone Warns As Subprime ABS Sales Accelerate

  Earlier this month, we gave readers a snapshot of the US auto market on the way to explaining why it was that car sales hit a 10-year high in May. To recap: 

  • Average loan term for new cars is now 67 months — a record.
  • Average loan term for used cars is now 62 months — a record.
  • Loans with terms from 74 to 84 months made up 30%  of all new vehicle financing — a record.
  • Loans with terms from 74 to 84 months made up 16% of all used vehicle financing — a record.
  • The average amount financed for a new vehicle was $28,711 — a record.
  • The average payment for new vehicles was $488 — a record.
  • The percentage of all new vehicles financed accounted for by leases was 31.46% — a record.

  We went on to note that despite the worrying statistics shown above, optimists (like Experian) will likely point to the fact that the average FICO score for borrowers financing new cars fell only slighty from 714 to 713 Y/Y while the same Y/Y scores for those financing used vehicles actually rose from 641 in Q1 2014 to 643 in Q1 2015. While that’s all well and good, there’s every indication that those figures are likely to deteriorate significantly going forward. Why? Because Wall Street’s securitization machine is involved. in the consumer ABS space (which encompasses paper backed by student loans, credit cards, equipment, auto loans, and other, more esoteric types of consumer credit), auto loan-backed issuance accounts for half of the market and a quarter of auto ABS is backed by loans to subprime borrowers. Put simply, those subprime borrowers are getting subprimey-er. 

  In other words, the same dynamic that prevailed in the US housing market prior to the collapse is at play in the auto loan market. Lenders are competing for borrowers as lucrative securitization fees beckon, and this competition is directly responsible for loose underwriting standards. Bloomberg has more on the interplay between auto ABS issuance and “stretched” auto loan terms:

  Demand for automobile debt in the U.S. is enabling lenders to make longer loans to people with spotty credit, stoking concern that car shoppers are being lulled into debt loads they won’t be able to sustain.

   

  Of the subprime vehicle loans bundled into securities, 73 percent now exceed five years, up from 64 percent during the first three months of 2014, according to data from Citigroup Inc. 

   

  Loans as long as seven years are increasingly being put into more bonds as auto-finance companies and Wall Street banks sell the securities at the fastest pace since 2007.

   

  The longer loans make it easier for consumers to afford rising new and used car prices by spreading out and lowering payments. While the securities are attracting plenty of buyers with high loss buffers and AAA ratings, some investors are beginning to question the wisdom of lending at terms that have never before extended beyond five years.

   

  “Everyone has used the argument that borrowers pay car loans because they have to get to work,” said Anup Agarwal, a money manager who oversees $65 billion at Western Asset Management Co. and hasn’t bought a subprime auto bond in a year and a half. “But borrowers only pay loans if the car is working. We have not seen this cycle come through yet.”

   

  A debt offering recently marketed by American Credit Acceptance LLC demonstrates some of the risks. About one-third of the 14,628 loans in the deal are tied to borrowers with credit ratings under 500 according to the Fair Issac Corp. grading system known as FICO — or with no score at all, according to a prospectus obtained by Bloomberg. The company is charging interest rates of between 27 and 28 percent for almost one-third of the borrowers, and more than half of its loans exceed five years.

   

  While cars are lasting longer than in the past, regulators are concerned that the value of the vehicles will fall faster than borrowers can pay off the debt.

   

  “Because cars depreciate quickly, a borrower is typically upside down or underwater toward the end of a long loan term,” Date said. “If times are tough you might have to sell your car, but you’re still going to owe more than you can get through the sale.”

   

  The riskiest auto bonds offer compensation of up to four times the coupon of comparably dated Treasuries, Bloomberg data show.

   

  History is also on the side of investors. Since 2004, S&P has upgraded 371 classes of subprime auto deals and downgraded none, data from the company show.

   

  Even with the built-in protections, some market participants are starting to caution that buyers may be letting down their guard for the sake of higher yields.

   

  Auto securities sold in 2014 have registered the highest loss rate of any period since 2008, according to data from JPMorgan Chase & Co.

   

  Some finance companies are avoiding the longer terms. Exeter Finance Corp., a Blackstone Group-backed subprime lending firm based in Irving, Texas, isn’t offering them because the risk is too high, said the firm’s treasurer, Andrew Kang.

   

   

  “At this time we have no intention of going longer than 72 months,” he said. “The risk is that you extend a loan that a borrower cannot afford over its term schedule. Inching out to 75 and 84 months, I don’t think that has been tested yet.”

  Here’s a visual overview of the auto loan-backed ABS market (note the resurrgence of subprime as a percentage of total issuance post-2009 and the rising net loss rates):

  

  

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  The takeaway here is simple: under pressure to keep the US auto sales miracle alive and feed Wall Street’s securitization machine (which is itself driven by demand from yield-starved investors) along the way, lenders are lowering their underwriting standards and extending loans to underqualified borrowers.

  Particularly alarming is the fact that even as average loan terms hit record highs, average monthly payments are not only not falling, but are in fact also sitting at all-time highs.

  This cannot and will not end well. 

  

  

  
  
  

  

• Soft Tyranny in Albuquerque: The Politics Of Better Call Saul!

  Submitted by Paul A. Cantor via The Mises Institute,

  In Breaking Bad, Vince Gilligan created one of the best shows in television history. He has followed it with a prequel, Better Call Saul!, which traces how the ethically-challenged lawyer featured in the earlier show — Saul Goodman — developed out of a perennial loser named Jimmy McGill. Breaking Bad fans are overjoyed that Gilligan has struck gold twice, and Better Call Saul! looks to become another television classic. And, although the show is not overtly libertarian, libertarians can learn from it.

  With only its first season completed, I’m sure the show has many surprises in store. But one thing is already clear: Gilligan continues to be the champion of the little guy against the establishment, and the poet of the shabbiness of ordinary existence in twenty-first-century America. He captures all the frustration, humiliation, and despair of living in the administered world of the modern state.

  Jimmy McGill is a bottom feeder in the swamp of government regulation that now covers the American landscape. As a rookie lawyer, Jimmy becomes a creature of the court system, trying to exploit it even as it exploits him. As the series opens, Jimmy is working as a public defender. In a heavily credentialed society, he is at a huge disadvantage — his law degree is from the University of American Samoa.

  Forced to beg for cases from an officious clerk, Jimmy is a parasite on society. If it weren’t for a myriad of government rules and regulations and a multitude of misfits who violate them, Jimmy would be out of work. Scratch beneath the surface of his world, and it’s government regulation all the way down.

  In only ten episodes, Jimmy has already run the whole gamut of modern bureaucracy. While struggling with the court system, he is also constantly interacting — and fighting — with a large, high-powered law firm that epitomizes the impersonality and coldness of modern office life. Jimmy has also run up against an uncaring hospital bureaucracy, which tries to commit his brother against his will to psychiatric treatment.

  As a named partner in the big law firm, Jimmy’s older brother Chuck might seem to represent the establishment himself. But he has developed a psychosomatic ailment, and thus joins the ranks of all the loners in Better Call Saul! who do not fit into society’s categories and thus incur its bureaucratic wrath.

  Another loner who runs afoul of the law in Better Call Saul! is Mike Ehrmantraut, Saul Goodman’s fixer and cleaner in Breaking Bad. When we learn his backstory in episode 6, we discover that he is a basically good man, who has turned to crime only because of his involvement with a corrupt police precinct in Philadelphia.

  In the final plot arc of the season, Jimmy develops a specialty in elder law, which takes him into the figurative bowels (and the literal dumpster) of an assisted living facility. In his efforts to help the old folks, Jimmy runs up against a new pack of lawyers, who swamp him with demands for paper work. The mounting cartons of case files Jimmy is continually dragging around symbolize the insane demands for documentation that bureaucracy imposes.

  Jimmy is fighting back against these bureaucratic forces, but only by turning his class action lawsuit into a RICO case, which will triple the damage award. Legal eagle Jimmy would have no talons without a federal statute originally intended to combat organized crime, but now routinely applied to white collar crime. In the end, the paperwork demands of the case force Jimmy to turn it over to the large law firm he despises. With all its complex rules, the state makes it impossible for a little guy like Jimmy to do business on his own.

  Libertarians tend to concentrate on the classic forms of government intervention: taxation, the monetary system, economic regulations. Better Call Saul! reminds us that government tyranny is actually more insidious and pervasive than might at first appear. When he was working on The X-Files, Gilligan had already explored the modern state’s panoptical regime, as analyzed by French philosopher Michel Foucault — a world rife with institutions, like schools, clinics, and prisons, that are not, strictly speaking, part of the government but nevertheless keep tabs on us and monitor our lives for the government’s purposes.

  A theme that unites Breaking Bad and Better Call Saul! (inherited from The X- Files) is that we live in a surveillance state and our government records can mark us for life. Jimmy is haunted by a single trumped-up sex crime charge.

  In order to regulate every aspect of our lives, the government cannot go it alone — it works through a web of intermediaries. Many of these institutions purport to take care of us, but in the process they chip away at our freedom. Better Call Saul! brilliantly portrays the interlocking directorate of modern government, quasi-governmental institutions, and all their satellites. The courts, the law firms, the police, the corporations, the hospitals, the assisted living facilities — they all work together to constrain our freedom — and they all operate within the state’s regulatory apparatus.

  Jimmy McGill is a contemporary Everyman, crushed by the soft tyranny Alexis de Tocqueville predicted for the United States in his Democracy in America. No wonder Jimmy is already embracing his dark, con-man side, and we can see him morphing into Saul Goodman.

   

  

  

  
  
  

  

• Nearly Half Of Americans Don't Trust Obama To "Do The Right Thing"

  Needless to say, not everyone is particularly enamored with US foreign policy under the Obama administration.

  Early attempts at a Russian “reset” have culminated in a “reset” of the Cold War, Yemen has gone from “model of success” to “failed state” in the space of nine months, and Syria has been transformed into what UN Secretary General Ban Ki-moon recently called “the worst circle of hell” after a former CIA “strategic asset” lost track of its Assad usurpation directive, went rogue, and embarked on bloody campaign to establish a medieval Islamic caliphate.

  Fortunately for the President, there are still some sympathetic countries out there (like France), but as you can see from the following map, the administration doesn’t fare very well in terms of the public’s perception of Obama’s propensity to “do the right thing regarding world affairs” in pivotal countries such as Israel, Pakistan, Ukraine, China, Russia, and .. America. 

  

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  That’s ok, the President is popular in the Philippines. 

  

  

  
  
  

  

• Obamatrade Passes, The Corporations Win Again… And Now They Gloat

  Moments ago, the passage of “Obamatrade” was assured when in 60-38 vote, the Senate cleared the “fast track” passage of the TPP also known as the Trans Promotion Authority with no votes to spare, ending the president’s long struggle to lift the measure out of the political quicksand that repeatedly came close to trapping it in both chambers.

  There was much drama, even more theater, but in the end the lobbying corporations which we laid out previously in the chart below, won. We are still shocked at how cheap it costs them to buy both the senate and the house.

  

   

  The details are well known to most but for anyone unfamiliar here is the WSJ with a simple recap: the legislation will give Obama “fast track” authority that allows him to submit trade deals to Congress for an up-or-down vote without amendments. Negotiators have said that process is crucial to completing the 12-nation trade deal with countries around the Pacific Ocean, known as the Trans-Pacific Partnership.

  “My standard for any trade agreement is that it must create good-paying 21st century jobs, increase the paychecks of American workers, and it must do so recognizing the relationship between commerce and climate,” Mrs. Pelosi wrote.

  Already approved by the House, the bill now heads to the White House for Mr. Obama’s signature. Its passage delivers a rare legislative victory for the second-term president whose agenda has largely stalled in a Congress now fully controlled by Republicans.

  Wednesday’s vote capped a fitful campaign that joined the White House, top GOP leaders and centrist Democrats to push through Congress legislation that both ends of the political spectrum opposed. Liberals viewed expanded trade as detrimental to U.S. jobs, while conservative members didn’t want to expand Mr. Obama’s authority.

   

  “We had plenty of bumps along the road. Frankly, a few big potholes too,” Senate Majority Leader Mitch McConnell (R., Ky.) said on the Senate floor Wednesday. “But we worked across the aisle to get through all of them.”

   

  Critics of the Pacific trade deal said Wednesday’s vote would diminish lawmakers’ ability to shape a better trade deal when it comes before Congress.

   

  “This body should not give up its authority to make better trade agreements,” Sen. Sherrod Brown (D., Ohio) said on the Senate floor Wednesday. “We’ve seen big promises and bad results on trade issue after trade issue after trade issue after trade issue.”

   

  Supporters said the bill would boost the U.S. economy by clearing a path for a trade deal with 11 other countries, representing about 40% of global gross domestic product.

  It won’t, in fact it will eliminate even more lower-paying jobs and eviscerate what little is left of America’s lower middle class. However, as it leads to job losses it will provide the US big pharma, who were revealed as some of the largest backers behind the TPP, with several more years of record profits even as the cost of medicines around the globe skyrockets.

  What is perhaps most surprising is who the decisive vote came from for yesterday’s cloture vote on TPP. As George Rasley reports, it was none other than GOP presidential candidate Marco Rubio’s vote during Tuesday’s Senate vote that was decisive:

  Yesterday’s procedural vote in the Republican-controlled Senate to give Obama Trade Promotion Authority, or “fast track” as it used to be called, passed by just one vote – that of Florida’s Republican Senator and presidential aspirant Marco Rubio.

  

  Why did Rubio vote to give Obama more power? No one knows for certain, but Senator Jeff Sessions, in a statement released after the vote shared some insight into the dynamics of what went on on Capitol Hill prior to the vote.

  “Americans increasingly believe that their country isn’t serving its own citizens. They need look no further than a bipartisan vote of Congress that will transfer congressional power to the Executive Branch and, in turn, to a transnational Pacific Union and the global interests who will help write its rules.

   

  “The same routine plays out over and again. We are told a massive bill must be passed, all the business lobbyists and leaders tell how grand it will be, but that it must be rushed through before the voters spoil the plan. As with Obamacare and the Gang of Eight, the politicians meet with the consultants to craft the talking points—not based on what the bill actually does, but what they hope people will believe it does. And when ordinary Americans who never asked for the plan, who don’t want the plan, who want no part of the plan, resist, they are scorned, mocked, and heaped with condescension.

   

  “Washington broke arms and heads to get that 60th vote—not one to spare—to impose on the American people a plan which imperils their jobs, wages, and control over their own affairs. It is remarkable that so much energy has been expended on advancing the things Americans oppose, and preventing the things Americans want.

   

  “For instance: thousands of loyal Americans have been laid off and forced to train the foreign workers brought in to fill their jobs—at Disney, at Southern California Edison, across the country. Does Washington rush to their defense? No, the politicians and the lobbyists rush to move legislation that would double or triple the very program responsible for replacing them”

  Where were those Disney workers located you might ask? Why in Marco Rubio’s home state of Florida, where some 250 Orlando-based workers were not only let go and replaced by cheaper (and younger) foreign workers – they were also required to train their foreign worker replacements.

  “I just couldn’t believe they could fly people in to sit at our desks and take over our jobs exactly,” one former worker, who wasn’t named and is now unemployed, told The New York Times. “It was so humiliating to train somebody else to take over your job. I still can’t grasp it.”

  Cost efficiency in a globalized economy some may say, and they could well be right; however in an economy as depressed as the US is, fabricated stock market gains aside, the last thing the fraying fabric of social stability needs is millions more laid off even with the BLS’s best double, triple, and quadruple seasonally-adjusted intentions to mask the underlying reality.

  * * *

  And while Sessions understandably laments the failure of US democracy once again, and the encroaching fascism of the deep (police) state, corporations promptly came out to gloat.

  Here are some examples:

  Cargill:

  Cargill applauds the passage of the Trade Promotion Authority (TPA) bill in the U.S. Congress. This bipartisan bill gives the executive branch the ability to negotiate trade agreements such as the Trans-Pacific Partnership, which are important for the future of the U.S. economy and for global food security. The U.S. economy and the world’s food supplies rely on international trade. Trade supports one in five U.S. jobs, including nearly 1 million farmers and agricultural workers who produce exports that supply the world with high-quality and affordable food

  Metlife

  MetLife, Inc. applauds action by both the House and the Senate to renew Trade Promotion Authority (TPA) legislation. The final congressional approval of TPA provides a path forward for the pending Trans Pacific Partnership (TPP), which is critical to U.S. companies doing business in the Asia-Pacific region. The trade agreements facilitated by TPA will encourage access to the financial protection and other life insurance products that are in growing demand globally.

  The Association of Global Automakers:

  On behalf of the more than 97,000 Americans our member companies employ, Global Automakers thanks all of the U.S. Senators and Representatives who supported Trade Promotion Authority (TPA) legislation. 

   

  Trade Promotion Authority is an important tool that will facilitate the negotiation of future trade agreements and help set the United States on a course toward sustained economic growth. Open trade and investment policies have encouraged international automakers to put down deep roots in the United States. These companies are driving the growth of the U.S. auto industry through job creation, manufacturing revitalization, and local research, design, sales and finance operations. Today, our members are creating products here for sale locally and around the globe, exporting 480,000 vehicles annually from the United States. Global Automakers appreciates President Obama’s leadership on this critical issue and looks forward to seeing TPA legislation signed into law as soon as possible.

   

  The Association of Global Automakers represents international motor vehicle manufacturers, original equipment suppliers, and other automotive-related trade associations. Our members include American Honda Motor Co., Aston Martin Lagonda of North America, Inc., Ferrari North America, Inc., Hyundai Motor America, Isuzu Motors America, Inc., Kia Motors America, Inc., Maserati North America, Inc., McLaren Automotive Ltd., Nissan North America, Inc., Subaru of America, Inc., Suzuki Motor of America, Inc., and Toyota Motor North America

  The National Retail Federation

  The National Retail Federation issued the following statement from President and CEO Matthew Shay on today’s Senate passage of Trade Promotion Authority:

   

  “This is a landmark step toward tearing down trade barriers that stand in the way of a truly free and open global economy. TPA will help complete trade agreements that will open new markets for U.S. companies and help retailers provide American families with the products they need at prices they can afford. This will ultimately mean more jobs for American workers and lower prices for American consumers. After weeks of partisanship, it’s refreshing to see Congress finally put good policy ahead of politics.”

  The Retail Industry Leaders Association

  The Retail Industry Leaders Association (RILA) issued the following statement in response to the passage of Trade Promotion Authority in the United States Senate.

   

  Retailers applaud the Senate for approving Trade Promotion Authority and paving the way to economic growth by providing American consumers and businesses with access to new markets,” said Hun Quach, Vice President for International Trade. “With its final approval from Congress, TPA will now ensure the Administration brings home trade agreements that create new opportunities for American businesses and bolsters U.S. competitiveness around the world.”

  And so on: press releases are cheap – each one costs at most 2-3 newly redundant workers.

  Finally, for those curious what today’s Senate roll call was, it is shown below. The most amusing thing: after voting Yes on the yesterday’s just as critical cloture vote, Rubio decided not to vote today. So how did the GOP get the required 60 votes? They had Corker, who did not vote yesterday, step in for Rubio who can now tell the public one of two stories: that he [voted|did not vote] for the TPA… depending on who the audience is.

  

  

  

  
  
  

  

• Top CEO Warns Of Global Reset: "It's In The Cards For Sure… It Could Happen This Year"

  Submitted by Mac Slavo via SHTFPlan.com,

  Over the last several months there have been numerous reports highlighting the frantic activities of the world’s ultra-wealthy elite. From the purchasing of emergency hideaways and airstrips to warnings from their financial advisors that it’s time to shift their assets into physical holdings, it appears that a lot of powerful people are afraid of a significant shift set to take place in the near future.

  In his latest interview with Future Money Trends Keith Neumeyer, who recently penned a very public (and very viral) letter to the Commodity Futures Trading Commissions outlining the rampant manipulation by concentrations of shadowy market players taking place on commodities exchanges, shares his insights on what many believe to be a coming global reset.

  According to First Mining Finance Chairman Neumeyer, the day of reckoning may come a lot sooner than most people think:

  It’s in the cards for sure. Predicting exactly what it’s going to mean or what it’s going to look like… that’s the big challenge… I think a lot of people are ignoring it… but there are some forward thinkers out there who talk about it.

   

  I think that the Chinese want their currency part of a floating currency… I think that’s really going to be the next leg in this whole change… in this reset going forward. It could even happen this year.

   

  Watch the full interview with Keith Neumeyer

   

  When this reset comes to pass the manipulations so apparent in commodities and broader stock markets today will be exposed, and according to Neumeyer, may lead to the biggest surge in precious metals we have ever seen.

  Echoing the forecasts of one of the world’s leading trend strategists Gerald Celenete, Neumeyer notes that the monetary system that takes hold after a global reset could result in gold rising to $3000 an ounce or more. Such a move would have a similar impact on silver, which may stabilize at it’s historical silver-to-gold ratio of 16:1, putting it’s strike price somewhere above $150 an ounce.

  Right now, you’re mining 10 ounces of silver for every one ounce of gold.  So gold is trading at… let’s say $1,200 just to round it up. So that would be $120 silver, if the ratio was 10-to-1. So I say silver should be $120.

   

  The other key ratio is the ratio that has been common for 500 years… Sir Isaac Newton came up with the ratio of 16-to-1 and that’s how they created the pound sterling. And so there was a theory that there was for every one ounce of gold, 16 ounces of silver in the earth’s crust. So using 16-to-1, at $1,200, it’s somewhere around $80-$90.

   

  Silver should be trading, in my view, somewhere from $80 to $120 an ounce.

  The prices Neumeyer cites are based on current trading levels, suggesting that silver is significantly under-priced already.

  Now imagine what happens should we see a widespread crisis and subsequent global reset of the financial, economic and monetary systems. Markets are so fragile that even something as simple as China publicly declaring their true gold holdings could spark the next bull run in precious metals:

  Of course it would and that plays back to what I was saying earlier. I don’t know if China’s ready for that to happen, because once they do it gold will probably go up by multiples… hundreds and hundreds of dollars.

   

  I could see gold going up to $3,000 or some number like that.

   

  Who knows exactly… but I do believe that that would occur because the people would see the hoard that the Chinese have actually accumulated over the last decade and that would completely change the market.

  Countries like China and Russia are secretly accumulating massive stockpiles of gold and silver. Further, the ultra-wealthy have been warned in no uncertain terms by their advisors to do the same.

  If there were ever a tell-tale sign that a momentous set of events is soon to take place, this is it. Follow the money, which at this time just so happens to be shifting to physical assets of real value in anticipation of the next leg of the global reset.

  

  

  
  
  

  

• Senator Slams Obamatrade: "They Won The Vote, But Lost The Trust Of The American People"

  Senator Jeff Sessions will release this statement in response to Senate's vote to advance the fast-track trade bill:

  Americans increasingly believe that their country isn’t serving its own citizens. They need look no further than a bipartisan vote of Congress that will transfer congressional power to the Executive Branch and, in turn, to a transnational Pacific Union and the global interests who will help write its rules.

   

  The same routine plays out over and again. We are told a massive bill must be passed, all the business lobbyists and leaders tell how grand it will be, but that it must be rushed through before the voters spoil the plan. As with Obamacare and the Gang of Eight, the politicians meet with the consultants to craft the talking points—not based on what the bill actually does, but what they hope people will believe it does. And when ordinary Americans who never asked for the plan, who don’t want the plan, who want no part of the plan, resist, they are scorned, mocked, and heaped with condescension.

   

  Washington broke arms and heads to get that 60th vote—not one to spare—to impose on the American people a plan which imperils their jobs, wages, and control over their own affairs. It is remarkable that so much energy has been expended on advancing the things Americans oppose, and preventing the things Americans want.

   

  For instance: thousands of loyal Americans have been laid off and forced to train the foreign workers brought in to fill their jobs—at Disney, at Southern California Edison, across the country. Does Washington rush to their defense? No, the politicians and the lobbyists rush to move legislation that would double or triple the very program responsible for replacing them.

   

  This ‘econometarian’ ideology holds that if a company can increase its bottom line – whether by insourcing foreign workers or outsourcing production – then it’s always a win, never a downside.

  *  *  *

  By way of example, here is Keith Tucker's explanation of just one aspect of the idiocy.

  

  

  

  
  
  

  

• Ku Klux Klan's Grand Dragon Says "A Lot Of The Whites In The U.S. Are Starting To Wake Up"

  At the end of last year, we counted down the most popular Zero Hedge posts of 2014. The fact that the term “civil unrest” appeared in the titles of both the number-one and number-two most popular articles of the year speaks volumes and suggests that what readers found most fascinating, and troubling, was the increasing preponderance of social disobedience and of covert, proxy or outright wars: phenomena that accompany a world sliding deeper into distress. 

  The riots that left Baltimore in ashes in late April and the massacre that occurred last week at the historic Emanuel AME church in Charleston serve as vivid reminders of the extent to which American society now teeters perpetually on the edge of social upheaval. Increasingly, those who feel ‘the system’ has somehow failed them are turning to violence as a means of addressing their grievances, which betrays a complete lack of faith in the government’s ability to help create the conditions under which groups and individuals with divergent interests can coexist without sinking into a Hobbesian state of nature. 

  What does the future hold for an American society gripped by social unrest and presided over by a legislature that refuses to legislate, and a President who, over the course of eight years has metamorphosed from the champion of solidarity and change to the poster child for fractious party politics and political gridlock? We can’t say, but in the wake of the tragic events that unfolded in South Carolina last week, one group has a prediction. Here’s Reuters:

  Leaders of America’s core white supremacist groups have a laundry list of perceived grievances. They say the media ignore black on white crime; that desegregation has led to poorer schools for white students; that white people in the United States have lost power to black people.

   

  And while they don’t condone last week’s shootings of nine black worshipers at a Charleston church, many of the leaders say they understand the motivation behind the attack – and predict more violence to come.

   

  

   

  Interviews with half-a-dozen prominent white nationalists reveal a movement that they say has been re-energized by such things as the election of America’s first black president and, more recently, what movement leaders describe as “a siege” against white police officers.

   

  “A lot of the whites in the U.S. are starting to wake up,” Robert Jones, grand dragon of the Loyal White Knights of the Ku Klux Klan in North Carolina, said in an interview. White people, he said, are getting “fed up” with the lack of attention paid to crimes against white people by blacks.

   

  Dylann Roof, the man accused of last week’s attack at Emmanuel African Methodist Episcopal Church in Charleston, is not known to have joined any of the established hate groups, but a manifesto attributed to him describes how he was radicalized online, learning about “brutal black on white murders” while surfing the website of the white nationalist Council of Conservative Citizens.

   

  Bradley Griffin, a Council board member, called the Charleston attack “horrifying,” And attempted to distance the organization from the killings. “No one in our group has ever said, ‘Go pick up a gun and shoot random people.’ I don’t know where this guy got that idea from,” he said in an interview.

   

  But he also said he’s sympathetic to Roof’s anger. “If anyone touches a hair on a black person, it’s international news, whereas the most horrific crimes imaginable are inflicted on whites all the time, and I think the media kind of wants to downplay that,” he said. The Council’s website, which has since been taken down, described the group “as the only serious nationwide activist group that sticks up for white rights.”

   

  Leaders of the white power movement warn that last week’s shootings could presage a rise in violence by disaffected whites who see their world changing in ways they can’t accept.

  
  

  “I expect that you’re going to see an uptick in those types of attacks,” said Brian Culpepper, a Tennessee chapter leader of the National Socialist Movement, the largest Neo-Nazi organization in the United States, referring to the shooting in Charleston.

   

  “Open borders is a huge problem,” he said in an interview, causing white people to be displaced by “third worlders,” and generating “resentment among the whites and among the nationalists.”

   

  And the groups don’t necessarily include all of those sympathetic to their principles. Roan Garcia-Quintana said he resigned from the Council of Conservative Citizens because “they were all interested in just complaining,” he said. And he stopped attending meetings of the League of the South, a group that wants “a free and independent Southern republic” to protect its “Anglo-Celtic core population,” because they were “like a history class.”

   

  Many African-Americans in the state say that such groups exacerbate racial tensions and help fuel the kind of violence Charleston saw last week.

  
  

  “It didn’t surprise me,” said Mary Quarles, a black woman who grew up in Abbeville, South Carolina. “We’re in the South and the South is the South.”

  Ultimately, it appears America has become a country wherein everyone feels marginalized and/or aggrieved in one way or another. In the absence of a dramatic societal reboot, we fear social instability is likely here to stay.

  

  

  
  
  

  

• We Are Reaching Peak Energy Demand, BP Data Suggests

  Submitted by Gail Tverberg via Our Finite World blog,

  Some people talk about peak energy (or oil) supply. They expect high prices and more demand than supply. Other people talk about energy demand hitting a peak many years from now, perhaps when most of us have electric cars.

  Neither of these views is correct. The real situation is that we right now seem to be reaching peak energy demand through low commodity prices. I see evidence of this in the historical energy data recently updated by BP (BP Statistical Review of World Energy 2015).

  Growth in world energy consumption is clearly slowing. In fact, growth in energy consumption was only 0.9% in 2014. This is far below the 2.3% growth we would expect, based on recent past patterns. In fact, energy consumption in 2012 and 2013 also grew at lower than the expected 2.3% growth rate (2012 – 1.4%; 2013 – 1.8%).

  

  Figure 1- Resource consumption by part of the world. Canada etc. grouping also includes Norway, Australia, and South Africa. F Soviet Union means Former Soviet Union. Middle East excludes Israel. Based on BP Statistical Review of World Energy 2015 data.

  Recently, I wrote that economic growth eventually runs into limits. The symptoms we should expect are similar to the patterns we have been seeing recently (Why We Have an Oversupply of Almost Everything (Oil, labor, capital, etc.)). It seems to me that the patterns in BP’s new data are also of the kind that we would expect to be seeing, if we are hitting limits that are causing low commodity prices.

  One of our underlying problems is that energy costs that have risen faster than most workers’ wages since 2000. Another underlying problem has to do with globalization. Globalization provides a temporary benefit. In the last 20 years, we greatly ramped up globalization, but we are now losing the temporary benefit globalization brings. We find we again need to deal with the limits of a finite world and the constraints such a world places on growth.

  Energy Consumption is Slowing in Many Parts of the World 

  Many parts of the world are seeing slowing growth in energy consumption. One major example is China.

  

  Figure 2. China’s energy consumption by fuel, based on data of BP Statistical Review of World Energy 2015.

  Based on recent patterns in China, we would expect fuel consumption to be increasing by about 7.5% per year. Instead, energy consumption has slowed, with growth amounting to 4.3% in 2012; 3.7% in 2013; and 2.6% in 2014. If China was recently the growth engine of the world, it is now sputtering.

  Part of China’s problem is that some of the would-be buyers of its products are not growing. Europe is a well-known example of an area with economic problems. Its consumption of energy products has been slumping since 2006.

  

  Figure 3. European Union Energy Consumption based on BP Statistical Review of World Energy 2015 Data.

  I have used the same scale (maximum = 3.5 billion metric tons of oil equivalent) on Figure 3 as I used on Figure 2 so that readers can easily compare the European’s Union’s energy consumption to that of China. When China was added to the World Trade Organization in December 2001, it used only about 60% as much energy as the European Union. In 2014, it used close to twice as much energy (1.85 times as much) as the European Union.

  Another area with slumping energy demand is Japan. It consumption has been slumping since 2005. It was already well into a slump before its nuclear problems added to its other problems.

  

  Figure 4. Japan energy consumption by fuel, based on BP Statistical Review of World Energy 2015.

  A third area with slumping demand is the Former Soviet Union (FSU). The two major countries within tithe FSU with slumping demand are Russia and Ukraine.

  

  Figure 5. Former Soviet Union energy consumption by source, based on BP Statistical Review of World Energy Data 2015.

  Of course, some of the recent slumping demand of Ukraine and Russia are intended–this is what US sanctions are about. Also, low oil prices hurt the buying power of Russia. This also contributes to its declining demand, and thus its consumption.

  The United States is often portrayed as the bright ray of sunshine in a world with problems. Its energy consumption is not growing very briskly either.

  

  Figure 6. United States energy consumption by fuel, based on BP Statistical Review of World Energy 2014.

  To a significant extent, the US’s slowing energy consumption is intended–more fuel-efficient cars, more fuel efficient lighting, and better insulation. But part of this reduction in the growth in energy consumption comes from outsourcing a portion of manufacturing to countries around the world, including China. Regardless of cause, and whether the result was intentional or not, the United States’ consumption is not growing very briskly. Figure 6 shows a small uptick in the US’s energy consumption since 2012. This doesn’t do much to offset slowing growth or outright declines in many other countries around the world.

  Slowing Growth in Demand for Almost All Fuels

  We can also look at world energy consumption by type of energy product. Here we find that growth in consumption slowed in 2014 for nearly all types of energy.

  

  Figure 7. World energy consumption by part of the world, based on BP Statistical Review of World Energy 2015.

  Looking at oil separately (Figure 8), the data indicates that for the world in total, oil consumption grew by 0.8% in 2014. This is lower than in the previous three years (1.1%, 1.2%, and 1.1% growth rates).

  

  Figure 8. Oil consumption by part of the world, based on BP Statistical Review of World Energy 2015.

  If oil producers had planned for 2014 oil consumption based on the recent past growth in oil consumption growth, they would have overshot by about 1,484 million tons of oil equivalent (MTOE), or about 324,000 barrels per day. If this entire drop in oil consumption came in the second half of 2014, the overshoot would have been about 648,000 barrels per day during that period. Thus, the mismatch we are have recently been seeing between oil consumption and supply appears to be partly related to falling demand, based on BP’s data.

  (Note: The “oil” being discussed is inclusive of biofuels and natural gas liquids. I am using MTOE because MTOE puts all fuels on an energy equivalent basis. A barrel is a volume measure. Growth in barrels will be slightly different from that in MTOE because of the changing mix of liquid fuels.)

  We can also look at oil consumption for the US, EU, and Japan, compared to all of the rest of the world.

  

  Figure 9. Oil consumption divided between the (a) US, EU, and Japan, and (b) Rest of the World.

  While the rest of the world is still increasing its growth in oil consumption, its rate of increase is falling–from 2.3% in 2012, to 1.6% in 2013, to 1.3% in 2014.

  Figure 10 showing world coal consumption is truly amazing. Huge growth in coal use took place as globalization spread. Carbon taxes in some countries (but not others) further tended to push manufacturing to coal-intensive manufacturing locations, such as China and India.

  

  Figure 10. World coal consumption by part of the world, based on BP Statistical Review of World Energy 2015.

  Looking at the two parts of the world separately (Figure 11), we see that in the last three years, growth in coal consumption outside of US, EU, and Japan, has tapered down. This is similar to the result for world consumption of coal in total (Figure 10).

  

  Figure 11. Coal consumption for the US, EU, and Japan separately from the Rest of the World, based on BP Statistical Review of World Energy data.

  Another way of looking at fuels is in a chart that compares consumption of the various fuels side by side (Figure 12).

  

  Figure 12. World energy consumption by fuel, showing each fuel separately, based on BP Statistical Review of World Energy 2015.

  Consumption of oil, coal and natural gas are all moving on tracks that are in some sense parallel. In fact, coal and natural gas consumption have recently tapered more than oil consumption. World oil consumption grew by 0.8% in 2014; coal and natural gas consumption each grew by 0.4% in 2014.

  The other three fuels are smaller. Hydroelectric had relatively slow growth in 2014. Its growth was only 2.0%, compared to a recent average of as much as 3.5%. Even with this slow growth, it raised hydroelectric energy consumption to 6.8% of world energy supply.

  Nuclear electricity grew by 1.8%. This is actually a fairly large percentage gain compared to the recent shrinkage that has been taking place.

  Other renewables continued to grow, but not as rapidly as in the past. The growth rate of this grouping was 12.0%, (compared to 22.4% in 2011, 18.1% in 2012, 16.5% in 2013). With the falling percentage growth rate, growth is more or less “linear”–similar amounts were added each year, rather than similar percentages. With recent growth, other renewables amounted to 2.5% of total world energy consumption in 2014.

  Falling Consumption Is What We Would Expect with Lower Inflation-Adjusted Prices

  People buy goods that they want or need, with one caveat: they don’t buy what they cannot afford. To a significant extent affordability is based on wages (or income levels for governments or businesses). It can also reflect the availability of credit.

  We know that commodity prices of many kinds (energy, food, metals of many kinds) have been have generally been falling, on an inflation adjusted basis, for the past four years. Figure 13 shows a graph prepared by the International Monetary Fund of trends in commodity prices.

  

  Figure 13. Charts prepared by the IMF showing trends in indices of primary commodity prices.

  It stands to reason that if prices of commodities are low, while the general trend in the cost of producing these commodities is upward, there will be erosion in the amount of these products that can be purchased. (This occurs because prices are falling relative to the cost of producing the goods.) If, prior to the drop in prices, consumption of the commodity had been growing rapidly, lower prices are likely to lead to a slower rate of consumption growth. If prices drop further or stay depressed, an absolute drop in consumption may occur.

  It seems to me that the lower commodity prices we have been seeing over the past four years (with a recent sharper drop for oil), likely reflect an affordability problem. This affordability problem arises because for most people, wages did not rise when energy prices rose, and the prices of commodities in general rose in the early 2000s.

  For a while, the lack of affordability could be masked with a variety of programs: economic stimulus, increasing debt and Quantitative Easing. Eventually these programs reach their limits, and prices begin falling in inflation-adjusted terms. Now we are at a point where prices of oil, coal, natural gas, and uranium are all low in inflation-adjusted terms, discouraging further investment.

  Commodity Exporters–Will They Be Next to Be Hit with Lower Consumption?

  If the price of a commodity, say oil, is low, this is a problem for a country that exports the commodity. The big issue is likely to be tax revenue. Governments very often get a major share of their tax revenue from taxing the profits of the companies that sell the commodities, such as oil. If the price of oil, or other commodity that is exported drops, then it will be difficult for the government to collect enough tax revenue. There may be other effects as well. The company producing the commodity may cut back its production. If this happens, the exporting country is faced with another problem–laid-off workers without jobs. This adds a second need for revenue: to pay benefits to laid-off workers.

  Many oil exporters currently subsidize energy and food products for their citizens. If tax revenue is low, the amount of these subsidies is likely to be reduced. With lower subsidies, citizens will buy less, reducing world demand. This reduction in demand will tend to reduce world oil (or other commodity) prices.

  Even if subsidies are not involved, lower tax revenue will very often affect the projects an oil exporter can undertake. These projects might include building roads, schools, or hospitals. With fewer projects, world demand for oil and other commodities tends to drop.

  The concern I have now is that with low oil prices, and low prices of other commodities, a number of countries will have to cut back their programs, in order to balance government budgets. If this happens, the effect on the world economy could be quite large. To get an idea how large it might be, let’s look again at Figure 1, recopied below.

  Notice that the three “layers” in the middle are all countries whose economies are fairly closely tied to commodity exports. Arguably I could have included more countries in this category–for example, other OPEC countries could be included in this grouping. These countries are now in the “Rest of the World” category. Adding more countries to this category would make the portion of world consumption tied to countries depending on commodity exports even greater.

  

  Figure 1- Resource consumption by part of the world. Canada etc. groupng also includes Norway, Australia, and South Africa. F Soviet Union means Former Soviet Union. Middle East excludes Israel. Based on BP Statistical Review of World Energy 2015 data.

  My concern is that low commodity prices will prove to be self-perpetuating, because low commodity prices will adversely affect commodity exporters. As these countries try to fix their own problems, their own demand for commodities will drop, and this will affect world commodity prices. The total amount of commodities used by exporters is quite large. It is even larger when oil is considered by itself (see Figure 8 above).

  In my view, the collapse of the Soviet Union in 1991 occurred indirectly as a result of low oil prices in the late 1980s. A person can see from Figure 1 how much the energy consumption of the Former Soviet Union fell after 1991. Of course, in such a situation exports may fall more than consumption, leading to a rise in oil prices. Ultimately, the issue becomes whether a world economy can adapt to falling oil supply, caused by the collapse of some oil exporters.

  Our Economy Has No Reverse Gear

  None of the issues I raise would be a problem, if our economy had a reverse gear–in other words, if it could shrink as well as grow. There are a number of things that go wrong if an economy tries to shrink:

  • Businesses find themselves with more factories than they need. They need to lay off workers and sell buildings. Profits are likely to fall. Loan covenants may be breached. There is little incentive to invest in new factories or stores.
  • There are fewer jobs available, in comparison to the number of available workers. Many drop out of the labor force or become unemployed. Wages of non-elite workers tend to stagnate, reflecting the oversupply situation.
  • The government finds it necessary to pay more benefits to the unemployed. At the same time, the government’s ability to collect taxes falls, because of the poor condition of businesses and workers.
  • Businesses in poor financial condition and workers who have been laid off tend to default on loans. This tends to put banks into poor financial condition.
  • The number of elderly and disabled tends to grow, even as the working population stagnates or falls, making the funding of pensions increasingly difficult.
  • Resale prices of homes tend to drop because there are not enough buyers.

  Many have focused on a single problem area–for example, the requirement that interest be paid on debt–as being the problem preventing the economy from shrinking. It seems to me that this is not the only issue. The problem is much more fundamental. We live in a networked economy; a networked economy has only two directions available to it: (1) growth and (2) recession, which can lead to collapse.

  *  *  *

  Conclusion

  What we seem to be seeing is an end to the boost that globalization gave to the world economy. Thus, world economic growth is slowing, and because of this slowed economic growth, demand for energy products is slowing. This globalization was encouraged by the Kyoto Protocol (1997). The protocol aimed to reduce carbon emissions, but because it inadvertently encouraged globalization, it tended to have the opposite effect. Adding China to the World Trade Organization in 2001 further encouraged globalization. CO2 emissions tended to grow more rapidly after those dates.

  

  Figure 14. World CO2 emissions from fossil fuels, based on data from BP Statistical Review of World Energy 2015.

  Now growth in fuel use is slowing around the world. Virtually all types of fuel are affected, as are many parts of the world. The slowing growth is associated with low fuel prices, and thus slowing demand for fuel. This is what we would expect, if the world is running into affordability problems, ultimately related to fuel prices rising faster than wages.

  Globalization brings huge advantages, in the form of access to cheap energy products still in the ground. From the point of view of businesses, there is also the possibility of access to cheap labor and access to new markets for selling their goods. For long-industrialized countries, globalization also represents a workaround to inadequate local energy supplies.

  The one problem with globalization is that it is not a permanent solution. This happens for several reasons:

  • A great deal of debt is needed for the new operations. At some point, this debt starts reaching limits.
  • Diminishing returns leads to higher cost of energy products. For example, later coal may need to come from more distant locations, adding to costs.
  • Wages in the newly globalized area tend to rise, negating some of the initial benefit of low wages.
  • Wages of workers in the area developed prior to globalization tend to fall because of competition with workers from parts of the world getting lower pay.
  • Pollution becomes an increasing problem in the newly globalized part of the world. China is especially concerned about this problem.
  • Eventually, more than enough factory space is built, and more than enough housing is built.
  • Demand for energy products (in terms of what workers around the world can afford) cannot keep up with production, in part because wages of many workers lag thanks to competition with low-paid workers in less-advanced countries.

  It seems to me that we are reaching the limits of globalization now. This is why prices of commodities have fallen. With falling prices comes lower total consumption. Many economies are gradually moving into recession–this is what the low prices and falling rates of energy growth really mean.

  It is quite possible that at some point in the not too distant future, demand (and prices) will fall further. We then will be dealing with severe worldwide recession.

  In my view, low prices and low demand for commodities are what we should expect, as we reach limits of a finite world. There is widespread belief that as we reach limits, prices will rise, and energy products will become scarce. I don’t think that this combination can happen for very long in a networked economy. High energy prices tend to lead to recession, bringing down prices. Low wages and slow growth in debt also tend to bring down prices. A networked economy can work in ways that does not match our intuition; this is why many researchers fail to see understand the nature of the problem we are facing.

  

  

  
  
  

  

• Pentagon Brands 'Belligerent' Journalists As Legitimate "Enemy Combatant" Targets

  The Pentagon has released an 1,176-page book of instructions on the "The Law Of War" detailing acceptable ways of killing the enemy. The manual also states that journalists can be labeled "unprivileged belligerents," an obscure term that replaces the Bush era "unlawful enemy combatant."

  As The Washington Times reports, an eye-catching section deals with a definition of journalists and how they are expected to stay out of the fight – 

  "In general, journalists are civilians. However, journalists may be members of the armed forces, persons authorized to accompany the armed forces, or unprivileged belligerents."

   

  While the Pentagon did not specify the exact circumstances under which a journalist might be declared an unprivileged belligerent, lumping terrorist writers with bona fide reporters prompted a civilian lawyer who opines on war crime cases to call the wording “an odd and provocative thing for them to write.”

   

  Michael Rubin, a Middle East expert at the American Enterprise Institute, said the manual reflects today’s muddled world of journalism.

   

  “It’s a realization that not everyone abides by the same standards we do,” said Mr. Rubin. “Just as Hamas uses United Nations schools as weapons depots and Iran uses charity workers for surveillance, many terrorist groups use journalists as cover.”

   

  Mr. Rubin recalled that two al Qaeda terrorists posed as journalists to assassinate anti-Taliban leader Ahmad Shah Massoud. Chechen Islamists went on missions with camera crews.

   

  “Journalists are the new consultant. Anyone can claim to be one,” he said. “No American serviceman should ever be killed because a politician told them they had to take a foreign journalist at his or her word.”

  As RT adds,

  The 1,176-page “Department of Defense Law of War Manual” explains that shooting, exploding, bombing, stabbing, or cutting the enemy are acceptable ways of getting the job done, but the use of poison or asphyxiating gases is not allowed.

   

  

   

  Surprise attacks and killing retreating troops have also been given the green light.

   

  But the lengthy manual doesn’t only talk about protocol for those on the frontline. It also has an extensive section on journalists – including the fact that they can be labeled terrorists.

   

  “In general, journalists are civilians. However, journalists may be members of the armed forces, persons authorized to accompany the armed forces, or unprivileged belligerents,” the manual states.

   

  The term “unprivileged belligerents” replaces the Bush-era term “unlawful enemy combatant.”

   

  …

   

  When asked what this means, professor of Journalism at Georgetown Chris Chambers told RT that he doesn’t know, “because the Geneva Convention, other tenets of international law, and even United States law – federal courts have spoken on this – doesn’t have this thing on ‘unprivileged belligerents’.”

   

  This means that embedded journalists, who are officially sanctioned by the military and attached to a unit, will be favored by an even greater degree than before. “It gives them license to attack or even murder journalists that they don’t particularly like but aren’t on the other side,” Chambers said.

   

  Even the Obama Administration’s definition of “enemy combatant” was vague enough, basically meaning any male of a military age who “happens to be there,” Chambers added.

  *  *  *

  The manual is the Pentagon's first all-in-one legal guide for the four military branches. Previously, each sector was tasked with writing their own guidelines for engagement, which presumably did not list journalists as potential traitors.

  The Pentagon did not specify the exact circumstances under which a journalist might be declared an unprivileged belligerent, but Chambers says he is sure “their legal department is going over it, as is the National Press Club and the Society of Professional Journalists.”

  *  *  *

  Full DoD Law Of War Manual below:

  

  

  
  
  

  

• In Historic Shift, Russia Overtakes Saudi Arabia As China's Number One Oil Supplier

  Over the course of the last seven months, we’ve painstakingly documented the quiet death of petrodollar mercantilism, the USD recycling system and fixture of the post-war global economic order that has served to underwrite decades of dollar dominance. 

  As a reminder, the petrodollar system works like this: oil export countries recycle the dollars they receive in exchange for their oil exports by purchasing more USD-denominated assets, boosting the financial strength of the reserve currency, leading to even higher asset prices and even more USD-denominated purchases, and so forth, in a virtuous (especially if one holds US-denominated assets and printed US currency) loop. 

  The flow of petrodollar reserves into financial markets peaked in 2006 and turned negative for the first time last year when Saudi Arabia famously Plaxico’d itself (and the US) by glutting the world with crude, in an attempt to crush Putin, and subsequently, to take out the US crude cost-curve. 

  

  

  

  And while the recent drawdown in oil exporters’ petrodollar reserves suggests Saudi Arabia’s actions were sufficient in and of themselves to catalyze the system’s demise, the US has accelerated the process by backing economic sanctions on Russia which, starting this year, began to settle oil and natural gas exports to China in yuan, marking what we have hailed as the  the intersection of two critically important themes that have far-reaching geopolitical and economic consequences: 1) the death of petrodollar mercantilism, and 2) the idea of yuan hegemony. 

  In “The PetroYuan Is Born: Gazprom Now Settling All Crude Sales To China In Renminbi”, we argued that as economic ties between China and Russia deepen (thanks to billions in currency swap lines and the construction of the new Western gas line which will deliver an additional 30bcm/y to China on top of the 38bcm/y which will flow through the “Power of Siberia” line once operational) Beijing could increasingly look to Moscow to meet China’s energy needs. This would of course only serve to further de-dollarize the global energy trade, dealing yet another blow to the petrodollar system. Sure enough, Russia has, for the first time in history, overtaken Saudi Arabia as China’s top oil supplier. FT has more:

  Russia was China’s largest supplier of crude oil for the first time on record in May, as Moscow looks beyond Europe for customers and grows its ties in the east.

   

  The country leapfrogged Saudi Arabia, the world’s largest oil exporter, sending almost 930,000 barrels a day to China, up 21 per cent since April, according to customs data published on Tuesday.

   

  Sino-Russian ties have warmed as sanctions over the conflict in Ukraine have strained Moscow’s relations with the west.

   

  Analysts said the data were the result of a string of oil-for-loan deals that China, which is in the process of overtaking the US as the world’s biggest importer of crude, has signed with Russian oil companies including state-backed Rosneft.

   

  “Russian imports are likely to stay high over the next several years as these long-term crude supply contracts kick in,” said Amrita Sen, head of oil research at Energy Aspects in London.

   

  “By our records, which started in 2007, this is the first time Russia is China’s top crude supplier,” she added.

   

  

   

  “This trend only depicts the inevitable problem that Middle Eastern producers are going to face in China,” said Ed Morse, Citigroup’s global head of commodities research.

   

  Loan-for-oil deals with Russia, as well as other countries such as Brazil, will “make it more difficult for Saudi Arabia, Iraq and others to compete for market share in China”, he added. Additional oil from Iran if sanctions are lifted will only increase the struggle.

  *  *  *

  Make no mistake, Europe’s move to extend economic sanctions on Russia into next year and the recent attempt by Belgium, France, and Austria to freeze Russian assets in an effort to enforce the unenforceable Yukos settlement, serve to drive Russia and its vast energy reserves further away and provide more incentives for Moscow and China to de-dollarize the global energy trade, facilitating both the demise of the petrodollar and the ascension of the yuan in the process.

  

  

  
  
  

  

• Dangerous, Phony 'Gun-Control'-Logic Strikes Again

  Submitted by Simon Black via Sovereign Man blog,

  I’m not going to make a trite comparison to Nazi Germany.

  That seems to be the libertarian thing to do whenever politicians bring up gun control.

  Yes, it’s true that throughout history, as long as there has been government, politicians have first sought to disarm their populations before descending into totalitarianism.

  But I don’t think that’s what’s happening here.

  In the wake of yet another horrible, senseless, shooting, there are once again growing calls to “do something” about all the “gun violence” in America.

  This response is pretty natural. It’s cause and effect: when something creates pain, we want to stop the pain.

  The logical syllogism is that if criminals are killing people with guns, then ‘we’ need to control guns.

  Mr. Obama himself has been thoroughly vocal on the subject, plainly stating that “innocent people were killed in part because someone who wanted to inflict harm had no trouble getting their hands on a gun”.

  

  Now he wants to do something about it.

  And to be fair, I really doubt there’s any sinister intent; the President is just doing what he feels is necessary to protect people.

  That’s the thing Presidents always say, after all. It’s always some line about how ‘protecting the American people is their #1 responsibility.’

  Actually it’s not.

  In fact, the word “protect” appears just one time in Article II of the Constitution (the part that deals with the President’s responsibilities).

  And it has nothing to do with protecting the American people.

  The word is used in reference to the oath of office that every President has taken since George Washington– to preserve, protect, and defend the Constitution of the United States.

  Funny thing about the Constitution is that it includes the “right of the people to keep and bear Arms.”

  So ultimately the President’s responsibility is to the Constitution, not to succumb to a knee-jerk reaction that doesn’t actually even make sense.

  Yes people are angry. And perhaps even scared. But the logic doesn’t add up.

  Number one, some people are just crazy. Completely batshit crazy.

  This kid who shot up a church because he hated black people was crazy.

  And there’s no amount of legislation that’s can protect people from crazy. If someone is really so psycho that they want to inflict harm, they’ll find a way.

  I saw the most horrendous video the other day. And I’m sorry I watched it, as it showed a beautiful 17-year-old girl getting stoned to death by hundreds of men in her tribe.

  Those guys are crazy. And they murdered this girl. No guns. Just rocks.

  So if we’re going to have gun control, we might as well have some stone control to go along with it.

  More importantly, whenever politicians talk about gun control, they express the most bizarre logic.

  They think guns in the hands of civilians are a danger to society, whereas guns in the hands of the government are protecting society.

  And whenever there’s some heinous incident of police brutality, they always tell us that it’s an isolated event that does not reflect on the police community in general.

  Then they make the problem worse with massive federal funding that turns police forces into paramilitary organizations, complete with urban assault vehicles.

  But the same logic should be applied for the millions of people who responsibly own firearms. One crazed lunatic certainly does not reflect on everyone.

  Yet when an incident like this does occur, the government response is to more heavily control public access to firearms.

  Look, it’s unfortunate to have to live in a world where there’s crazy people who want to do bad things.

  But it would be even more unfortunate to live in a world where we are regulated against being able to defend ourselves against those people… and the institution with the monopoly over ‘protecting’ us has a long-term track record of violence, intimidation, and abuse.

  Listen in to hear more on today’s Podcast…

  

  

  

  
  
  

  

• Icahn Frets, Fed Threats & Greek Regrets Send Stocks Sliding

  It had to be this…

   

  Between Carl Icahn's frets over bubbles, Fed threats over rate hikes no matter what, and Greek regrets over unacceptable EU creditor terms, stocks just could not hold on to hope gains…

  

   

  From The FOMC Statement, stocks are still green…

  

   

  On the day Trannies were spanked… after ramping on DOE inventory data as algos latched on to oil idiocy…

  

   

  VIX jumped from an 11 handle yesterday to a 13 handle today…

  

   

  Trannies are back in correction…

  

   

  Dow broke thru the 50DMA and tested the 100DMA…

  

   

  It's been a volatile week… (but remember everyone told you that Greece doesn't matter and is priced in…)

  

   

  NFLX pumped and dumped a few more retail muppets to losses today…

  

   

  Deja Vu all over again from the last NFLX stock split?

  

   

  AAPL was the oinly Dow stock green – thanks to Carl Icahn saying he has not sold any stock…

  

   

  Greek stocks appear to still believe… (still up 7% on the week!?)

  

   

  Treasury yields slid lower after 2 big selling days…Notice that after the big deals yesterday we rally in bonds today as rate lock pressure lifts…

  

   

  The USDollar limped lower with modest EUR strength happening after the Greek deal appeared to fall through…

  

   

  Commodities were a mixed mess – an early slam in precious metals was bid back then a EU close collapse in Crude and copper…

  

   

  Biggest down day in Crude in 3 weeks…

  

   

  One quick question – if Icahn is right that HY is in a bubble, then WTF are stocks in again?

  

   

  Charts: Bloomberg

  Bonus Chart: The Macro Bounce Is Over…

  

  Bonus Bonus Chart: "that's what makes a market"

  "We're in a sweet spot." #drink pic.twitter.com/e8apz5cWH2

  — Rudolf E. Havenstein (@RudyHavenstein) June 24, 2015

  

  
  
  

  

• Simple Solution to the Great Paradox

  By Chris at www.CapitalistExploits.at

  KISS… You’ve likely heard the acronym used before: Keep it simple, stupid!

  It can be applied to anything in life, except for perhaps keeping one’s wife happy which is why man invented quantum physics. I was reminded of this when a friend recently began complaining about his very expensive luxury imported car and the cost to get it serviced.

  Truthfully, it’s a horrible looking ostentatious thing which I’ll refrain from mentioning for fear of offending some readers (OK, it’s a Jag). But nevertheless – I realized that my cheap and nasty Nissan Land Cruiser has no such problems. It’s almost impossible to break and even when not serviced just keeps on running like a well watered 20-something Kenyan.

  I like simple. Investing in real estate, like my trusty Nissan, is simple. The factors to consider when determining any real estate purchase are easy enough to understand and the cashflows are typically stable and easy to quantify. Leverage can usually be added and quantified.

  Real estate can be as lively as an Ibiza disco to your income statement, while at the same time appearing to look like a slum from the outside. I have proof. It has the ability to turn pennies into pounds when bought well, and when well positioned has been the cornerstone of many millionaires beginnings.

  It is therefore a tragedy that central bankers have made such an enormous mess of our credit markets and incentivized ever increasing layers of debt.

  As a result, when we scour the globe for opportunities it’s incredibly rare that we see huge opportunities in much of the developed world. Paradoxically, markets which have been cut off from the monetary spigot often present far more compelling opportunities. 

  

  Colombia is a country we’ve had on our radar for some time and in line with keeping things simple, I provide a few factors prevalent that have us interested:

  • The income of the average Colombian has doubled in less than a decade, bringing a massive shift into the middle class bracket.
  • Leverage is very low and interest rates high. Unlike the insanely indebted Western world, Colombia still suffers from a banking and credit system which is still in its infancy. This is a good thing for risk reduction.
  • A banking and credit sector that is growing rapidly meaning that while leverage is low now that is not likely to remain the case indefinitely.
  • Strong GDP growth.
  • Low(er) unemployment.
  • Controlled inflation.
  • A growing housing deficit due to demographics and disposable income.
  • Closely tied to the point above is the fact that there exists a lack of capital available to developers, further constricting supply.
  • Large scale infrastructure projects underpinning growth.

  On the topic of Colombian real estate I recorded a brief call with Hector Quintana of Zen Global who will be joining us in Colombia for our Seraph Meet Up.

  We discussed Colombian real estate and opportunities we find most interesting there. I think you’ll find our conversation valuable and invite you to listen below:

  

  If you wish to join us in Medellin, Colombia in August to explore opportunities in the local real estate market and more, you can get more information HERE.
  

  
  – Chris
  

   

  “Simplicity is the ultimate sophistication.” – Clare Boothe Luce

  

  
  
  

  

• Picturing John Kerry's Iran Nuclear Deal Progress

  As they say on stage, “break a leg” John…

  • *IRAN BEING OFFERED HIGH-TECH REACTORS AS PART OF NUKE DEAL: AP

  

   

  Source: Investors.com

  

  

  
  
  

  

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