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[Markets] Nomura: Here Are The 3 Signs Stocks Are Becoming Concerned About Excessive Fed Tightening

By Charlie McElligott, head of cross-asset strategy at Nomura

Momentum Parties While Softer US Dollar, PBOC Actions Boost Risk-Assets

Global risk-sentiment in one asset: Offshore Yuan sees a powerful reversal STRONGER again overnight and is back through the “centrifugal pull” of 6.85, to 6.827 all the way from ~6.90 earlier (!)  

And this is why, just out now: *PBOC SAID TO PLAN RESUMING COUNTER-CYCLICAL FACTOR IN YUAN FIX, which will likely contribute bias towards a STRONGER Yuan fixing vs Dollar

Along with a broadly weaker USD (G10 and EM), this is risk-asset stabilizing, with the “virtuous cycle” back in-play: firmer Commodities / higher “Inflation Expectations” (5Y Breakevens back above 1.985) and stronger Emerging Markets see better global Equities / higher UST Yields overnight

Macro-wise, the key STRUCTURAL “go forward” themes for risk-assets come down to aforementioned

  1. “USD Direction” (near-term) and
  2. U.S. Yield Curve “shape” (medium-term), as any “steepening” will likely be signaling that the market is “sniffing-out a slowdown” from “Peak Cycle,” and beginning to REMOVE rate hike projections from the front-end—this is why we’ve pushed the 1y and 2y expiration curve-caps as broad risk hedges

To this latter-point, I remain fixated on the inversion of EDZ9-Z0 spread, as well as the recent precipitous decline in March ’19 hike probabilities—going from 63.5% to now “just” 45% in less than a month

Tactically however, I remain focused on the U.S. Equities-centric theme of “the great performance puke of 2018,” as it will then act as a critical input / catalyst for “the next move” post-Labor Day.

I expect September to be “grabby” within U.S. Equities (particularly “Momentum” factor) on account of said “performance-anxiety” as funds are being “left behind” and thus, forced back into the market.

Anecdotally I’m being told of funds already taking-up “nets” and “chasing” already on account of this “FOMO,” following this enormous underperformance period of past months (and yes, I am aware that many view this as a “contrarian / bearish” indicator!)

This “performance puke” (since mid-May for some) was best-exemplified by the incredible drawdown in “1Y Momentum” factor, -8.8% from start June 5th to July 5th alone; this played-out in “acute reversals” in key status-quo themes: ‘Cyc / Def-,’ ‘Growth / Momentum vs Value / Quality-,’ ‘Small / Large-‘ all experienced  powerful rebalances / rotations at times.

The issue has really been about the destruction of “short books” initially (many “High Short Interest” proxies +7% to 9% QTD), which then contributed to sloppy trades in “crowded longs” like Media, China Internet, Casinos, Video Games, all seeing sloppy EPS-related selloffs.

To be fair, some “Growth”–tilted investors have enjoyed a renaissance over the past few sessions; however, broad “consensual longs” continue to struggle against underperformance across various “Crowded Short” proxies.

My call to get long U.S. Equities “1Y Momentum” into September is going bonkers in the best of fashions—the Nomura Momentum Factor is now +3.1% in two sessions since walking-through my rationale on the call, as funds “leg into” the tactical trade—in these two sessions, both legs are working—“Mo Longs” are +1.8% (Tech / Cons Disc / Biotech reasserting themselves) while “Mo Shorts” are -1.3% (Industrials, Financials, broad “Defensives” again struggling).

With U.S. Equities “Momentum” now +6.9% MTD and +3.1% the past two sessions alone, I am already nearing initial profit-taking levels; however I do expect more strength again today with the positive “risk” backdrop and weaker USD setting-up for more of the same.

Finally to reiterate, I DO then believe that following this Equities “burst” into Sep that we will then see reinvigorated Oct cross-asset volatility.

  • The macro-catalyst being the “QT escalation” theme I’ve been speaking-to leading to potential “interest rate volatility / tantrums”
  • I too expect high-potential for “position asymmetry” to “tip-over,” as both systematic- and fundamental- investors accumulate leverage and large position size via lower realized volatility into the “risk rally”

Reminder—the QI long-term macro factor sensitivity model for SPX is showing three signs that U.S. Equities are becoming concerned about excessive Fed tightening, in-line with my “QE to QT” thesis:

  • Long-term SPX model sensitivity to “Inflation Expectations” has now turned ‘negative’
  • Long-term SPX model sensitivity to “US Real Rates” has now turned ‘negative’
  • The formerly “positive sensitivity” of SPX to DXY too has ‘rolled-over’
Published:8/24/2018 8:22:17 AM
[Entertainment] New book to focus on women in Donald Trump's life A best-selling author and Newsweek correspondent has a book coming out on President Donald Trump and the women in his life.
Published:8/23/2018 9:43:16 AM
[Markets] The Unpleasant Truth About The 1941 Parachuting Of Rudolf Hess In England, Part 2

Authored by Sylvain LaForest via Oriental Review,

Read Part 1 here...

The context

A little context is mandatory to perfectly define the message that Rudolf was carrying. The outstanding works of researchers such as Anthony Sutton and Charles Higham are critical in our understanding of the real historical context surrounding the creation of the Nazi war machine. When in 1933 Hitler accessed to the Chancellery in the Reichstag, Germany was in financial limbo. Worst, the nation was in the gutters of limbs. It owed tens of billions in reparations for WW1, and its inability to comply had provoked a gargantuan-scale inflation crisis on the mark in 1923 that cut the currency to 1/500 billionth of its original value. To make matters worse, the country suffered along everyone the world Crash of 1929. So how in the world was Germany able to eradicate unemployment and create the most formidable military machine the world had ever seen in just 6 years? Over achievement is under rated when it comes to explain the German Miracle of the ’30s.

The first tool that is required in our investigator’s toolbox is to admit the very documented fact that the Bank of England, controlled by the Rothschild family, had been involved in the financing of the Nazis. It had become a common procedure for the rich European banking family to fund enemies as well as allies, in order to make profits from both sides of wars since Napoleon. The self-proclaimed French Emperor of the early 19th century had been hired as a proxy by Rothschild who wanted to impose his private central banks in the conquered countries. So, the heirs of the Rothschild family saw in Hitler their next Napoleon, who would submit rival colonial empires like Belgium, the Netherlands and France, as well as destroying the mighty USSR, in order to singlehandedly take the reins of the New World Order, which is simply the economical and political ruling of the whole planet by a handful of bankers.

Even though the New World Order sounds like a supercharged conspiracy theory, it’s an indisputable and quite simple concept.

Even if the infamous banking family helped the Führer, the bulk of the money that flooded Germany between 1933 and 1939 didn’t come from England, but mainly from the United States of America. Not the American government per say, but more specifically American bankers and industries. Through white-washing money schemes, through the newly founded Bank of International Settlements and through joint venture investments in Germany with their companies such as Standard Oil, GM, Ford, ITT, General Electric or IBM; Rockefeller, Morgan, Harriman, DuPont, Ford and a few other billionaires were mainly responsible for what is known as the German Miracle, that now looks more like an American Dream.

Thanks to British and American investments, Nazi Germany went from the poorest country in Europe to the second world economy. Even though education won’t tell you anything about it, the overwhelming help that Hitler got from the West is never disputed because it was exposed in numerous US inquiries, senatorial committees and court cases based on the Trading with the enemy Act adjusted by President Roosevelt in 1933, but the verdicts always came after the usual “we didn’t know what Hitler was going to do next” explanation. As if Mein Kampf, published in 1925, hadn’t been clear enough on the matter.

The War

Things looked fine for England at the start.

Hitler quickly filled the mandate he had on top of his agenda by invading the colonial trio of Netherlands-Belgium-France in a month and a half. The complicity of the British Army is appalling in the lightening speed success of the Wehrmacht.

The four “allied” countries had together 149 divisions, or 2 900 000 men, while the Wehrmacht had 2 750 000 men split in 137 divisions. Allied countries had more canons, more tanks, more ammunition, yet France, a country of 70 million people, gave up in one month!

History tried to explain this lame defeat by the unstoppable German blitzkrieg, but this blitz was advancing at 15 km/hour, when it was moving at all. One would think that there was plenty of time to aim at this jogging pace. Russian historian Nikolay Starikov has looked thoroughly over what happened on the ground to find some plausible clues to the quick defeat of France in June 1940, which can be summed up very simply: Churchill betrayed France, as clear as crystal, by purposely failing the French General Weygan’s plan of defense. This grand treason is also circumstantial evidence of what self-proclaimed virtuous nations can do to each other that extends to the destruction of an ally for your own benefit.

But Hitler was yet to reward Churchill for his great help in the conquest of France, so he turned a blind eye on the evacuation of the British army in Dunkirk that history explains as a “strategic blunder” from Hitler. Reality does explain rather mysterious events of the war that only find dubious explanations in our books; another unexplainable event was the vicious attack of the British Navy on France’s fleet in July 1940, presumably to avoid that the ships fall in German hands. It turns out that it was another very positive step in order to complete the destruction of the French colonial empire, as were the operations by Rothschild-funded Japan that were ousting the French from Indochina at the same time. From the British point-of-view, the Wehrmacht pit-bull would next leave France and jump at the throat of USSR.

Against Churchill’s expectations, the next few months were devoted to the Battle of Britain that started by a German invasion of the Channel Islands, from where German planes could start bombing England. Churchill was evil, but he wasn’t so stupid as to not understand that Hitler had stopped working for England. Whatever the deal was, the RAF defense definitely slowed down any advantage that the Luftwaffe could gain over the British skies and after the horrendous mutual bombings of London and Berlin, Germany decided on October 12th 1940 to postpone its operation Sea Liondesigned to invade England with ground troops. It looked like Germany and England were in a stalemate by the winter of 1940-1941.

If you’re acquainted with the official history, you would think that Hitler’s attack on great American allies such as France and England would have motivated the USA to enter the war at once, but no. Not at all. President Roosevelt even declared on October 30th 1940 that “his boys wouldn’t go to war”. This policy would extend until the spring of 1941, and not a single move, decision or sanction was undertaken by the US government that really looked like it had decided to never get involved in WW2.

The theater of war moved into North Africa and the Middle East for the winter, where people could kill and maim each other under more pleasant and milder climate. With the melting of ice and snow in the spring of 1941, Hitler was facing two options: launch Sea Lion and invade England, or leave the West in peace and launch Barberossa against the Soviet Union.

Both were major operations that couldn’t be sustained by Germany at once, and Hitler had to make a choice. He also knew that the invasion of England would’ve mortally crippled the Rothschild family’s influence on the planet and paved the way for Wall Street to rule the world at will.

Well folks, that’s precisely when Rudolf Hess was parachuted in England on May 10th 1941. Without any form of speculation, it now appears very clearly that Hitler didn’t want to take this mighty decision alone, and that he didn’t want the rest of the world to know about his dilemma.

The Proposal

According to an article published in May 1943 by the magazine American Mercury, here’s what the Führer proposed to England through Rudolf Hess:

Hitler offered total cessation of the war in the West. Germany would evacuate all of France except Alsace and Lorraine, which would remain German. It would evacuate Holland and Belgium, retaining Luxembourg. It would evacuate Norway and Denmark. In short, Hitler offered to withdraw from Western Europe, except for the two French provinces and Luxembourg [Luxembourg was never a French province, but an independent state of ethnically German origin], in return for which Great Britain would agree to assume an attitude of benevolent neutrality towards Germany as it unfolded its plans in Eastern Europe. In addition, the Führer was ready to withdraw from Yugoslavia and Greece. German troops would be evacuated from the Mediterranean generally and Hitler would use his good offices to arrange a settlement of the Mediterranean conflict between Britain and Italy. No belligerent or neutral country would be entitled to demand reparations from any other country, he specified.

Basically, Hitler wanted to be a partner in a British-led New World Order by taking care of Eastern Europe. He even spoke in front of the Reichstag about the option of peace with England. The American Mercury article concluded that these very likely terms offered by Hitler to be implemented on the spot were swiftly rejected by Churchill since none of the conditions ever happened, but in reality, they were terms to be applied after the war, after the destruction of the USSR by Germany. But the Red Army had other future plans, of course.

There is no doubt that we are now deep into speculation about whatever proposal Hess made to England, but in reality, this wasn’t the main point of his mission. And independently of the exact terms that were discussed, what was to happen next dissipates any cloud of mystery, be it thin or thick.

To be continued...

Published:8/20/2018 2:52:02 AM
[World] The Margin: Barack Obama and Bill Gates agree that this book is an absolute must-read Microsoft founder-turned-philanthropist Bill Gates calls it “one of the best books I’ve ever read,” saying it offers a breakthrough way to see how life is getting better and where it still needs to improve. Count Barack Obama a big fan, too.
Published:8/20/2018 12:38:09 AM
[Markets] What If Russiagate Is The New WMDs?

Authored by Jack Hunter via The American Conservative,

Democrats, certain in their accusations of guilt, sound a lot like Republicans in 2002...

“The evidence against Trump and Russia is huge and mounting every day,” declared liberal celebrity activist Rosie O’Donnell at a protest in front of the White House last week.

“We see it, he can’t lie about it,” she added. “He is going down and so will all of his administration.”

“The charge is treason,” O’Donnell declared. Protesters held held large letters that spelled it out: T-R-E-A-S-O-N.”

O’Donnell is by no means alone in her sentiments. Trump’s guilt in “Russiagate” is now assumed by much of the American left, and reaches greater levels of fervor with every passing day.

This kind of partisan religiosity is not new.

In the wake of the 2003 U.S. invasion of Iraq, conservative pundit Ann Coulter accused war opponents of “treason” and insisted of Saddam Hussein, “We know he had weapons of mass destruction.”

Coulter was confident and she wasn’t alone. Virtually the entire mainstream American right—from pundits like Coulter and Sean Hannity to President George W. Bush and the Republican Congress—was deeply invested in the notion that Hussein possessed WMDs and that the Iraq war was justified based on that unshakeable premise. This belief was so ingrained for so long that many excitedly rushed to pretend that chemical weapons discovered in Iraq as reported by the New York Times in 2014 were somehow the same thing as the “mushroom cloud” the Bush administration said Saddam was capable of.

Unfortunately for the right (and America, and the world), that premise turned out to be false. There were no WMDs. Today, only a minority of delusional, face-saving hawks and unreconstructed neoconservatives still parrot that lie.

And far from being “traitors,” Iraq war opponents today are considered to have been on the right side of history.

Now, “Russian collusion” could be becoming the new WMDs.

The post-2016 left’s most dominant narrative is arguably their deeply held belief—with all the ferocity and piety of yesterday’s pro-war conservatives—that Russia colluded with Trump’s campaign to undermine the presidential election. Many believe that the president and anyone who supports his diplomatic efforts like Senator Rand Paul are in the pocket of Russian President Vladimir Putin.

“I will meet not just with our friends, but with our enemies,” said Barack Obama in 2008, and he did just that with Putin, as has every other president in recent times.

But Trump-Russia relations have been spun into far-fetched conspiracy theories on the left. New York Magazine’s Jonathan Chait recently went so far as to speculate that Trump has been a Russian agent since 1987, a cockamamie idea on par with the Weekly Standard’s Stephen Hayes’ discredited conspiracy theory that Saddam and Osama bin Laden were in cahoots.

It really was plausible that Iraq had WMDs in 2003 based on what our intelligence agencies knew, or purported to know. Today, it is feasible that American democracy really has Putin’s fingerprints on it based on things revealed by U.S. intelligence.

But isn’t it also possible that the left is reading far too much into Russiagate?

The Nation’s Aaron Maté believes liberals are overreaching, and that’s putting it mildly:

From the outset, Russiagate proponents have exhibited a blind faith in the unverified claims of US government officials and other sources, most of them unnamed. The reaction to special counsel Robert Mueller’s recent indictment of 12 Russian military-intelligence officers for hacking of Democratic party servers and voter databases is no exception. Mueller’s indictment is certainly detailed. Most significantly, it marks the first time anyone has been charged for offenses related to Russiagate’s underlying crime.

But while it is a major step forward in the investigation, we have yet to see the basis for the allegations that Mueller has lodged. As with any criminal case, from a petty offense to a cybercrime charge against a foreign government, a verdict cannot be formed in the absence of this evidence.

Then the irony kicks in. Maté continues, “The record of US intelligence, replete with lies and errors, underscores the need for caution. Mueller was a player in one of this century’s most disastrous follies when, in congressional testimony, he endorsed claims about Iraqi WMDs and warned that Saddam Hussein ‘may supply’ chemical and biological material to ‘terrorists.’”

Noting Mueller’s 2003 WMD testimony is not an attempt to undermine him or his investigation, something Maté also makes clear. But it does serve as an important reminder that “intelligence” can be flat-out wrong. It reminds us how these scenarios, which so much of Washington and the elite class fully endorse, can be looked back on as lapses of reason years later.

Mass psychology is real. Political classes and parties are not immune.

“Suppose, however, that all of the claims about Russian meddling turn out to be true,” Maté asks. “Hacking e-mails and voter databases is certainly a crime, and seeking to influence another country’s election can never be justified.”

He continues, “But the procession of elite voices falling over themselves to declare that stealing e-mails and running juvenile social-media ads amount to an ‘attack,’ even an ‘act of war,’ are escalating a panic when a sober assessment is what is most needed.”

The U.S. could have certainly used less hyperbole and more sobriety in 2002 and 2003.

And there’s good chance that when the history books are written about American politics circa 2018, much of Russiagate will be dismissed as more Red Scare than Red Dawn.

With Russia, as with WMDs, left and right have elevated slivers of legitimate security concerns to the level of existential threat based mostly on their own partisanship. That kind of thinking has already proven to be dangerous.

We don’t know what evidence of collusion between the Trump camp and Russia might yet come forth, but it’s easy to see how, even if this narrative eventually falls flat, 15 years from now some liberals will still be clinging to Russiagate not as a matter of fact, but political identity. Russia-obsessed liberals, too, could end up on the wrong side of history.

No one can know the future. Republicans would be wise to prepare for new, potentially damaging information about Trump and Russia that may yet emerge.

Democrats should consider that Russiagate may be just as imaginary as Republicans’ Iraq fantasy.

Published:8/19/2018 10:55:58 PM
[World] BOOK REVIEW: 'Dr. Benjamin Rush' by Harlow Giles Unger


By Harlow Giles Unger

Basic Books, $28, 320 pages

Of the heroic men who signed the Declaration of Independence, Dr. Benjamin Rush surely deserves high rank for all-around versatility.

In addition to putting his life on the line (literally) ... Published:8/19/2018 1:55:49 PM

[Entertainment] 5 new books not to miss this week, including Karin Slaughter's thriller, 'Pieces of Her' Look for the new thriller from Karin Slaughter and a biography of tennis legend Arthur Ashe. Plus more new books on sale Aug. 21.
Published:8/19/2018 5:19:22 AM
[Markets] Seymour Hersh And The Death Of Journalism

Authored by James Bovard via The American Conservative,

He won a Pulitzer for My Lai and cracked Abu Ghraib wide open. But this reporter is still a lonely breed.

Seymour Hersh, Reporter: A Memoir, Sy Hersh. Knopf, June 2018, 368 pages

When people are comforted by government lies, trafficking the truth becomes hellishly difficult. Disclosing damning facts is especially tricky when editors en masse lose their spines. These are some of the takeaways from legendary Seymour Hersh’s riveting new memoir, Reporter.   

Shortly before Hersh started covering the Pentagon for the Associated Press in 1965, Arthur Sylvester, the assistant secretary of defense for public affairs, berated a group of war correspondents in Saigon: “Look, if you think any American official is going to tell you the truth, then you’re stupid. Did you hear that? Stupid.” Hersh was astonished by the “stunningly sedate” Pentagon press room, which to him resembled “a high-end social club.”

Hersh never signed on to that stenographers’ pool. He was soon shocked to realize“the extent to which the men running the war would lie to protect their losing hand.” Hersh did heroic work in the late 1960s and early 1970s exposing the lies behind the Vietnam War. His New Yorker articles on the My Lai massacre scored a Pulitzer Prize and put atrocities in headlines where they remained till the war’s end.   

Hersh’s 1974 expose on the CIA’s illegal spying on Americans helped spur one of the best congressional investigations of federal wrongdoing since World War II. (Many of the well-written reports from the Senate Select Committee to Study Governmental Operations with Respect to Intelligence Activities remain regrettably relevant to the Leviathan in our time.) By the late 1970s, despite revelations of CIA assassinations and other atrocities, Hersh was chagrined that “[n]o one in the CIA had been prosecuted for the crimes that had been committed against the American people and the Constitution.” Welcome to Washington.

Any journalist who has been hung out to dry will relish Hersh’s revelations of editors who flinched. After Hersh joined the Washington bureau of the New York Times, he hustled approval for an article going to the heart of foreign policy perfidy. Bureau chief Max Frankel finally approved a truncated version of Hersh’s pitch with the caveat that he should run the story by “Henry [Kissinger] and [CIA chief] Dick [Helms].” Hersh was horrified: “They were the architects of the idiocy and criminality I was desperate to write about.” A subsequent Washington bureau chief noted that the Times “was scared to death of being first on a controversial story that challenged the credibility of the government.”

After Hersh exited the Times, snaring high-profile newshole became more challenging. When he pitched a piece to the New Yorker on the turmoil and coverups permeating the 1989 U.S. invasion of Panama, editor Robert Gottlieb told him to “go for it.” But as Hersh was exiting Gottlieb’s office, the editor added: “Sy, I just want you to know that I don’t like controversy.” Gottlieb had the wrong dude. Elsewhere in the book, Hersh slams a gutless specimen at Life magazine, “If there is a journalism hell, that editor belongs there;” he also clobbers the Times business section’s “ass-kissing coterie of moronic editors.” On the other hand, throwing a typewriter through a plate glass window would perturb even the paper’s non-moronic editors.  

Despite superb demolitions by Hersh and other reporters, the credibility of government agencies soon revived like a salamander growing a new tail. After Nixon was toppled, “the pendulum had swung back to a place where a president’s argument that national security trumps the people’s right to know was once again carrying weight with editors and publishers,” Hersh noted. A few weeks before the 9/11 attacks, New York Times columnist Flora Lewis, wrote that “there will probably never be a return to the… collusion with which the media used to treat presidents, and it is just as well.” But the collapse of the World Trade Center towers made the media more craven than at any time since Vietnam. Washington Post Pentagon correspondent Thomas Ricks complained that, in the lead-up to the U.S. invasion of Iraq, “There was an attitude among editors: ‘Look, we’re going to war, why do we even worry about all this contrary stuff?’” 

Hersh’s career revived after 9/11 with a series of New Yorker exposés on the lies, failures, and shenanigans of the War on Terror. He soon “began to comprehend that 8 or 9 neoconservatives who were political outsiders in the Clinton years had essentially overthrown the government of the United States—with ease.” Hersh eventually concluded that “America’s neocons were a menace to civilization.” But, with the exception of his explosive work on Abu Ghraib and the torture scandal, his articles rarely received the attention they deserved. Hersh’s reports on the war on terror have been far more accurate and prescient than the vast majority of the stories touted by cable news, but he is rarely credited for his foresight.

In recent years, Hersh has been criticized for writing articles that rely too heavily on too few, and not altogether authoritative sources. After his articles on the killing of Osama Bin Laden (he presented an alternative scenario that questioned the Pentagon’s version of events) and  White House claims about a 2013 Syrian chemical weapons attack were rejected by American publications, he published them in London Review of Books and has continued to publish his gumshoe reporting there and in places like Germany’s Welt am Sonntag. In his book, Hersh declares that “insider sources” are “what every reporter needs.” But some of the sources he now relies on  may have long since retired or no longer have access to 24 karat insider information.

There are some excellent investigative journalists at New York TimesUSA Today, and elsewhere, but the most visible media venues have often ignored the most potentially damning stories. The mainstream media continues to pursue Russian collusion in the 2016 presidential campaign like Captain Ahab chasing Moby Dick. At the same time, they almost completely ignore how U.S. government manipulations are paving the path to war with Iran. Most of the American media coverage of the Syrian civil war has been appalling, touting a fairytale of terrorist extremists as freedom fighters, and ignoring the flip-flops and contradictions in U.S. policy. In a 2013 interview, Hersh derided the American media’s fixation on “looking for [Pulitzer] prizes. It’s packaged journalism so you pick a target like are railway crossings safe and stuff like that.”

Reporting nowadays rarely penetrates the Leviathan’s armor. Fourteen years after Hersh broke Abu Ghraib, many of the details of the post- 9/11 torture scandal remain unrevealed. Could anyone imagine Liuetenant William Calley, who was convicted of mass murder for the 1968 My Lai carnage, subsequently becoming a favorite media commentator on military ethics, foreign policy, and democracy? No. But the main culprits in the torture scandal and coverup—from George W. Bush and Dick Cheney, to former CIA chief John Brennan—are all regularly touted these days as founts of wisdom. The veneration of Bush, Cheney, and Brennan is one of the starkest measures of the failure of journalism in our time.

Hersh’s Reporter has plenty of tips for journalists willing to vigorously hound government wrongdoing. But finding good venues for smoking guns may be more difficult now than ever. As Assistant Pentagon Secretary Sylvester scoffed at reporters in that 1965 Saigon briefing, “I don’t even have to talk to you people. I know how to deal with you through your editors and publishers back in the States.” Unfortunately, there are too many editors and publishers who would rather kowtow than fight.

Published:8/18/2018 8:45:11 PM
[Markets] "Facebook Enshrines Stupidity!" Doug Casey Dumps On Social Media's Ubiquity

Authored by Joel Bowman via,

Joel Bowman: G’day, Doug. Thanks for speaking with us today.

Doug Casey: No problem, Joel. It’s a pleasure to hear your Australian accent come across the ether from Mexico.

Joel: Let’s dive right in. A week or two ago, Facebook registered the largest single day loss for any one company in stock market history – roughly $122 billion. CEO Mark Zuckerberg lost around $15 billion himself, as much as the annual GDP of several resource-rich, West African nations.

Looking back to 2000, during the go-go days of the boom, Intel and Microsoft both registered staggering single-day losses, too… $90 billion and $80 billion, respectively. And we know what happened next in that case...

So, investors want to know… is past prologue? What’s next for Silicon Valley’s tech darlings?

Doug: Talking about losing multiple billions in a single day, it’s really a sign of the times. I remember when the only billionaires in the world were Howard Hughes, John Paul Getty and John Beresford Tipton-- the mythical billionaire on a 1950’s-era show called “The Millionaire.”

These days, however, it seems everyone’s a billionaire. In fact, there are several thousand billionaires roaming the planet today, with new ones being minted almost every day.

Of course, much of this so-called wealth is just paper. It’s not real. In fact, it’s pretty clear to me that we’re in a stock market bubble. Which is being driven by the bond market hyper-bubble. And that, in turn, is fueling a real estate bubble, which I believe is just now beginning to deflate in major cities around the world.

None of this augurs well for the stock market. You’ve got bubbles all over the place. Except in the resource market. That’s the one place that hasn’t inflated. In fact, it’s been going down since it’s last peak in 2011.

Getting back to Facebook, I hope it goes bankrupt. I hate it as an institution. I hate what it does. I don’t like its policies. I don’t like its management. I don’t like the fact that it’s causing people to destroy whatever privacy they have left. While turning their brains to mush sending out selfies all day.

Joel: You’ve put a lot on the table there, Doug. Let’s unpack a bit of that, starting with the general tendency toward cerebral rot…

Many younger readers may not remember this, but there actually existed a time before everybody knew everything, when people had to read books and discuss them, engage in healthy debate and rigorous dialectic in order to learn and develop intellectually.

Now that everyone apparently has plenty of time to Instagram their kale salads and “like” one and other’s cat pictures, are we to assume mankind has finally reached the End of Learning…some new Age of Enlightenment?

Or might Facebook and its (anti)social media cousins represent – in addition to the potential fallout for investors – another, hidden cost to society?

Doug: Perhaps humanity is bifurcating into the Morlocks and the Eloi at this point. It’s true that people used to go to libraries. But even the Library of Congress has only a tiny fraction the world’s data available; libraries are quaint and delightful, but they’re dinosaurs.

All the knowledge in the world is now at our fingertips on the Internet. The Internet is one of the greatest inventions in history, on a par with moveable type and the Gutenburg printing press. A few people are using it to educate and better themselves—but relatively few.

Most people just use it for trivial amusement, as you mentioned. Facebook adds very little value to the equation. In fact, I can’t see that it does much that’s productive. It’s basically a vehicle for gossip and watching cat videos.

Joel: And it’s less than that. Aside from the general degradation of public discourse, social media also represents a kind of unalterable historical record of bad jokes and regrettable moments, accessible to anyone who may wish to besmirch one’s character or skittle one’s reputation.

We’ve all said things we wish we hadn’t. To err is to be human, after all. What do you make of a world in which everyone’s worst moments are readily available to everyone else – including potential enemies – at the click of a mouse?

Doug: Facebook enshrines stupidity. A heavy Facebook user is, in effect, saying: “Look at me! I’m a thoughtless person who doesn’t have anything better to do with his time”. That’s on top of the fact that users are exposing their thoughts, actions, and whereabouts to the NSA, the FBI, the CIA and any of a hundred other nefarious agencies. In fact, there are credible allegations that Facebook, along with Google and Amazon, are willing tools of these intelligence agencies. No good can come of being a Facebookista.

But that’s about whether you should use Facebook. Whether you should own Facebook stock is a different question. Even after the recent selloff, Facebook still has a market cap of about $500 billion, which impresses me as a lot for a chat site cum advertising vehicle. Especially one where most of its growth is behind it. A lot of users are getting hip to the fact they’re not customers, they’re the product.

Facebook was a clever innovation ten years ago. But you know, there’s an old saying in the stock market: High Tech, Big Wreck!

Just as Myspace was displaced by Facebook, I predict Facebook 2.0 will come along and replace Facebook. My understanding is that kids now see Facebook as something used by old people-- people over 21 years of age. So if it’s going nowhere with the younger generation, where’s it’s future? Maybe it picks up a billion new users in the Third World. Ultimately, what’s that worth?

Facebook may not be a terminal short sale, but I certainly won’t be putting any of my own money into the stock.

Joel: Assuming you’re correct and Facebook 2.0 does displace the current market leader, are you hopeful that such a platform may serve to promote a heightened level of discourse? Perhaps people might find their way into “phyles,” that is, subgroups based on commonly shared values that actually have real world meaning?

Doug: I hope that, in a year or two, International Man itself grows into a community of like-minded people with above average I.Q.s, libertarian values, and real world experience. IM might, itself, even branch off to become its own kind of Facebook. A private version.

I know there’s a lot of talk about regulating FB, or breaking it up. That’s a bad idea; the government should have zero to do with business in general—and areas related to free speech in particular. I’m disgusted by the fact FB has kicked Alex Jones and others off their platform. But they have a right to do so, as a private company. Although, on the other hand, they’re almost a creature of the State.

But that’s not an excuse for the government to “step in”. What will happen is that a newer, better Facebook lookalike—or a dozen of them—will replace them. FB will self-destruct. It’s a non-problem.

To be frank, you and I don’t really have that much in common with most of the 7.3 billion people on this planet. In fact, while I like many individual humans, I despise humanity in general. The more people you put together in a group, the more they act like chimpanzees. Big groups force down the lowest common denominator.

There’s some cause for optimism, but only on a person-to-person basis. I prefer the company of people who value free minds and free markets—and I suspect most people who are reading this now feel the same way.

Joel: That’s probably a very good note to end this conversation on, Doug. Thanks, as always, for taking the time.

Doug: Meanwhile, we’ll look for something with the potential of Facebook in 2008… and stay away from Facebook today.

Published:8/18/2018 4:45:15 PM
[World] Colorado University Professor Assigns Anti-Trump Material as Required Class Reading

A professor at a university in Colorado has assigned books that criticize President Trump as required reading material for her class.

Published:8/18/2018 9:13:07 AM
[Markets] New Mexico Jihad Compound Mysteriously Destroyed By Authorities

New Mexico authorities have executed a court order to destroy an encampment where the son of a famous New York Imam ritualistically murdered his three-year-old son and trained nearly a dozen other children to commit school shootings, according to Taos, NM prosecutors. 

The decision to raze the compound is the latest controversial development in the case, after New Mexico judge Sarah Backus on Monday ordered four out of five alleged Muslim extremists free on a $20,000 "signature bond" (meaning they didn't have to pay), including the suspect in his son's murder, Siraj Ibn Wahhaj. 

NBC News reports that police seized an RV where eleven children and five adults lived in what was described as squalor, while also bulldozing the entrance to an underground tunnel where the decomposing body of three-year-old Abdul-ghani Wahha, kept there in the hopes that he would resurrect as Jesus and use his psychic powers to help the group target "corrupt institutions and people" with "violent actions."

Ammo and a bulletproof vest were discovered at the scene after the camp was broken down. 

Judge Backus drew harsh rebuke from prosecutors, law enforcement and New Mexico Governor Susana Martinez, who said she "strongly disagreed" with the decision to release the suspects on signature bail. "Unfortunately, it highlights how extreme the New Mexico Supreme Court has been in dictating pretrial release for all kinds of dangerous criminals." 

Backus - who survived a petition to replace her in 2016 with a "Qualified judge," wrote that the State of New Mexico "apparently expected the court to take the individuals’ faith into account" in determining whether or not the defendants accused of operating a radical Islamic training camp pose a danger to the community, notes the Daily Caller

Taos County Sheriff Jerry Hogrefe said that during the initial serving of the search warrant, their tactical team came upon children holding boxes of ammo, and at least one child was armed when he was found. The defendants' attorney tried to downplay the "heavily armed" portion of the case.  

While cross-examining of Hogrefe, the suspects' defense attorneys each took their chance to try and distance the suspects as far from the weapons as possible, and the connotations of violence they imply. One defense attorney suggested it's "prudent" that children learn how to use firearms safely, which Hogrefe agreed to.

The sheriff also confirmed that Alcohol, Tobacco and Firearms is investigating the legalities surrounding the occupants' possession of firearms. 

Another defense attorney pointed out, and Hogrefe confirmed, that the compound's occupants did not shoot at the tactical team as they raided the compound. He did say, however, that Morton was "struggling" and "resisting" while being arrested by deputies.

For her decision to free the suspects, Backus says she has received over 200 threats, including death threats, which resulted in the evacuation of a New Mexico courthouse on Tuesday. 

Backus has received more than 200 threats, according to Barry Massey, a spokesman for New Mexico Courts. Callers have threatened physical violence against Backus, including some people who threatened to slit Backus' throat and smash her head, Massey said. People also lashed out on social media and also threatened court staff, Massey said. -CNN

Backus has been called an "Islamic terrorist sympathizer" and a "disgusting garbage human," according to Massey. 

Published:8/16/2018 6:58:35 PM
[Markets] New Mexico Judge Cries Islamophobia In Decision To Free Jihadi Compound Suspects

Reactions have ranged from shock to disbelief at a New Mexico judge's decision to free five suspects operating a heavily armed camp where prosecutors allege 11 malnourished children were being trained for jihad while on the FBI's radar.

Despite authorities finding the decomposing body of a three-year-old boy who was reportedly killed in a ritual ceremony by his father - the son of a famous Imam, who claimed the seizure-stricken child would resurrect as Jesus and use his psychic powers to help the group target "corrupt institutions and people" with "violent actions," and despite a letter from one suspect to his brother inviting him to "die as a martyr," New Mexico judge Sarah Backus on Monday released five alleged Muslim extremists on a $20,000 "signature bond" (meaning they don't have to pay it) - while effectively admonishing the prosecution for Islamophobia. 

A smiling Siraj Ibn Wahhaj, 40, is released on bail

Backus - who survived a petition to replace her in 2016 with a "Qualified judge," wrote that the State of New Mexico "apparently expected the court to take the individuals’ faith into account" in determining whether or not the defendants accused of operating a radical Islamic training camp pose a danger to the community, notes the Daily Caller

Judge Sarah Backus

“The defendants are apparently of the Muslim faith,” read the order. “The Court was asked by the State to make a finding of dangerousness and a finding of no conditions of release could ensure the safety of the community. The State apparently expected the court to take the individuals’ faith into account in making such a determination. The Court has never been asked to take any other person’s faith into account in making a determination of dangerousness. The Court is not aware of any law that allows the Court to take a person’s faith into consideration in making a dangerousness determination.”

“The state alleges there was a big plan afoot but the state has not shown to my satisfaction by clear and convincing evidence what in fact that plan was,” Backus said Monday according to CNN. “The state wants me to make a leap and it’s a large leap and that would be to hold people in jail without bond based on — again — troubling facts but I didn’t hear any choate [sic] plan that was being alleged by the state.”

Taos County Sheriff Jerry Hogrefe said that during the initial serving of the search warrant, their tactical team came upon children holding boxes of ammo, and at least one child was armed when he was found. 

While cross-examining of Hogrefe, the suspects' defense attorneys each took their chance to try and distance the suspects as far from the weapons as possible, and the connotations of violence they imply. One defense attorney suggested it's "prudent" that children learn how to use firearms safely, which Hogrefe agreed to.

The sheriff also confirmed that Alcohol, Tobacco and Firearms is investigating the legalities surrounding the occupants' possession of firearms. 

Another defense attorney pointed out, and Hogrefe confirmed, that the compound's occupants did not shoot at the tactical team as they raided the compound. He did say, however, that Morton was "struggling" and "resisting" while being arrested by deputies.

In reaction to Judge Backus's decision, New Mexico Governor Susana Martinez said she "strongly disagreed" with the outcome of the hearing, stating "Unfortunately, it highlights how extreme the New Mexico Supreme Court has been in dictating pretrial release for all kinds of dangerous criminals." 

So despite the dead child found at the heavily armed Islamist compound, where one of the 11 malnourished children told authorities they would be kidnapped or killed if they didn't commit jihad at the behest of their reincarnated Jesus - Judge Backus could not be compelled to deny bail.

For her decision, Backus says she has received over 200 threats, including death threats, which resulted in the evacuation of a New Mexico courthouse on Tuesday. 

Backus has received more than 200 threats, according to Barry Massey, a spokesman for New Mexico Courts. Callers have threatened physical violence against Backus, including some people who threatened to slit Backus' throat and smash her head, Massey said. People also lashed out on social media and also threatened court staff, Massey said. -CNN

Baccus has been called an "Islamic terrorist sympathizer" and a "disgusting garbage human," according to Massey. 

Published:8/15/2018 12:34:11 PM
[Markets] The Internet Just Crowd-funded The Release Of 4,358 CIA Mind-Control Documents


A crowdfunding campaign has succeeded in raising the funds necessary to pay a Freedom of Information Act request fee for documents related to the CIA’s controversial MKUltra program.

John Greenewald of Black Vault, a website that publishes government documents, appealed to the internet for help after the agency refused to waive the $425 fee it was demanding to release the documents. Greenewald, who has been filing FOIA requests for two decades, had previously published files on MKUltra, a program best known for dosing individuals with drugs like LSD to research mind control.

Wikipedia explains MKULTRA as the following:

Project MKUltra - sometimes referred to as the CIA’s mind control program - was the code name given to an illegal program of experiments on human subjects, designed and undertaken by the United States Central Intelligence Agency (CIA). Experiments on humans were intended to identify and develop drugs, alcohol, stick and poke tattoos, and procedures to be used in interrogations and torture, in order to weaken the individual to force confessions through mind control. Organized through the Scientific Intelligence Division of the CIA, the project coordinated with the Special Operations Division of the U.S. Army’s Chemical Corps. The program began in the early 1950s, was officially sanctioned in 1953, was reduced in scope in 1964, further curtailed in 1967 and officially halted in 1973.  The program engaged in many illegal activities;  in particular it used unwitting U.S. and Canadian citizens as its test subjects, which led to controversy regarding its legitimacy.  MKUltra used numerous methodologies to manipulate people’s mental states and alter brain functions, including the surreptitious administration of drugs (especially LSD) and other chemicals, hypnosis, sensory deprivation, isolation, verbal and sexual abuse, as well as various forms of torture.

The scope of Project MKUltra was broad, with research undertaken at 80 institutions, including 44 colleges and universities, as well as hospitals, prisons, and pharmaceutical companies. The CIA operated through these institutions using front organizations, although sometimes top officials at these institutions were aware of the CIA’s involvement. As the US Supreme Court later noted, MKULTRA was:

concerned with “the research and development of chemical, biological, and radiological materials capable of employment in clandestine operations to control human behavior.” The program consisted of some 149 subprojects which the Agency contracted out to various universities, research foundations, and similar institutions. At least 80 institutions and 185 private researchers participated. Because the Agency funded MKUltra indirectly, many of the participating individuals were unaware that they were dealing with the Agency.

Project MKUltra was first brought to public attention in 1975 by the Church Committee of the U.S. Congress, and a Gerald Ford commission to investigate CIA activities within the United States. Investigative efforts were hampered by the fact that CIA Director Richard Helms ordered all MKUltra files destroyed in 1973; the Church Committee and Rockefeller Commission investigations relied on the sworn testimony of direct participants and on the relatively small number of documents that survived Helms’ destruction order.

In 1977, a Freedom of Information Act request uncovered a cache of 20,000 documents relating to project MKUltra, which led to Senate hearings later that same year.  In July 2001, some surviving information regarding MKUltra was declassified.

The program was shut down, and the documents were reportedly destroyed in 1973 at the order of then-director Richard Helms, but some were eventually released.

Greenewald filed his first request for the documents in the late ‘90s and says he didn’t hear back for years. In 2004, the CIA released some relevant documents to him via CD-Rom, which he published, but years later, he discovered thousands of pages were missing.

So, even though I paid for the CDs already, and they gave me an index originally stating that 100% of those records were on the CD-ROMs, they in fact, were not,” he said in his GoFundMe appeal. He filed a new request but the CIA is charging him $425 to print 4,358 pages of previously withheld material. He easily met his goal of $500 (to cover any additional costs and GoFundMe fees) with the help of just 16 donors.

MKUltra has been extensively verified - in one case, the CIA kept seven prisoners at a Kentucky penitentiary high on acid for 77 days  - but many of the documents are not available to the public. Though the CIA claims the documents he is requesting are not related to MKUltra, and rather, pertain to “behavioral modification,” Greenewald isn’t convinced. “Whether or not that ties into MKUltra and mind control, which I believe it does, the CIA claims it does not,” he told Vice News.

To me, even though the government lies, documents do not,” Greenewald said.

And documents tell a very interesting story. That’s why I love them.”

He added, “We shouldn’t be afraid to ask questions.”

Published:8/14/2018 3:53:50 PM
[Politics & Ideas] Socialism Return

For some on the right who sold books, sat behind microphones, or crafted the themes that GOP candidates deployed on the campaign trail, one word ...

The post Socialism Return appeared first on Commentary Magazine.

Published:8/14/2018 3:00:14 PM
[Markets] New Mexico Judge Releases Jihadi Terrorist Camp Suspects Despite Pleas By Sheriff, FBI

A New Mexico judge on Monday agreed to release five suspects arrested on child abuse charges at a New Mexico camp, against the wishes of both the sheriff's department and the FBI, which described the group as "heavily armed and considered extremist(s) of the Muslim belief." 

Judge Sarah Backus ordered the suspects - Siraj Ibn Wahhaj, 40, Lucas Morton, 40, Jany Leveille, 35, Hujrah Wahhaj, 37, and Subhannah Wahhaj, 35 - released on $20,000 bond each Monday evening, reports the Taos County Sheriff's Office. They will be required to wear ankle monitors and maintain weekly contact with their attorneys, and were ordered to cooperate with the New Mexico Children Youth and Families division (CYFD) where the eleven children the sheriff says were being trained to commit school shootings, are being held in protective custody.

Despite authorities finding a dead child's remains on the compound, and an alleged letter sent from one suspect to his brother inviting him to come to New Mexico and die as a martyrJudge Backus ruled that the state failed to meet the burden of showing the suspects were a danger to the community after several hours of testimony.


State prosecutors outlined evidence suggesting that at least some of the suspects could have been planning some sort of attack. They said Siraj Wahhaj – who also faces child abduction charges from Georgia after allegedly taking his 3-year-old son – took several weapons classes before coming to New Mexico, and books found on the compound focused on how to build firearms at home.

Various weapons and ammo were found during the raid on August 3, and several more firearms were discovered in subsequent searches. The children were allegedly taught how to load and fire assault rifles.

The 11 kids found at the compound ranged in age from 1 to 15, authorities said. Since the raid they have been placed in the protective custody of state welfare workers with the Children, Youth and Families Department.

According to FBI agent Travis Taylor, according to interviews with two teens from the compound, Siraj Wahhaj would lead rituals while reading from the Quran, which centered on his now-dead son - who he kidnapped from his mother in Jonesboro, Georgia in order to perform an exorcism to cure his seizures. 

We're sure Judge Backus's ruling has nothing to do with the fact that the training camp's ringleader, Siraj Ibn Wahhaj, is the son of a famous New York Imam, Siraj Wahhaj - an alleged unindicted co-conspirator in the 1993 WTC bombing, who testified as a character witness for the notorious "blind sheikh" Omar Abdel Rahman - who was convicted in 1995 of plotting the attack, according to CBS News. The senior Wahhaj was also described by Women's March founder and liberal Islamic activist Linda Sarsour as a "mentor," and an "amazing man." 

Taos County Sheriff Jerry Hogrefe said that during the initial serving of the search warrant, their tactical team came upon children holding boxes of ammo, and at least one child was armed when he was found. 

While cross-examining of Hogrefe, the suspects' defense attorneys each took their chance to try and distance the suspects as far from the weapons as possible, and the connotations of violence they imply. One defense attorney suggested it's "prudent" that children learn how to use firearms safely, which Hogrefe agreed to.

The sheriff also confirmed that Alcohol, Tobacco and Firearms is investigating the legalities surrounding the occupants' possession of firearms. 

Another defense attorney pointed out, and Hogrefe confirmed, that the compound's occupants did not shoot at the tactical team as they raided the compound. He did say, however, that Morton was "struggling" and "resisting" while being arrested by deputies.

In reaction to Judge Bacuss's decision, New Mexico Governor Susana Martinez said she "strongly disagreed" with the outcome of the hearing, stating "Unfortunately, it highlights how extreme the New Mexico Supreme Court has been in dictating pretrial release for all kinds of dangerous criminals." 

Read the Sheriff's August 4 statement here: 

Published:8/14/2018 1:22:06 PM
[Markets] Venezuelan Pirates Spread Fear Across The Caribbean

Authored by Joseph Lafave via The Daily Caller,

Vessels sailing in the vicinity of Trinidad and Tobago are now under threat of being the victims of piracy for the first since the 1700sAccording to a report from the Washington Post, in the wake of Venezuela’s economic and societal collapse, criminals desperate to earn a living have taken up the centuries-old crime and are attacking yachts and fishing vessels along the coast of South America.

Jeremy McDermott of Insight Crime, a nonprofit that studies organized crime in the region told the Washington Post that “It’s criminal chaos, a free-for-all, along the Venezuelan coast.”

Although there hasn’t been much research into piracy in the Caribbean, one study from the nonprofit group Oceans Beyond Piracy found that pirate attacks in the region rose by 163 percent between 2016 and 2017. Some experts fear that pirate activity and other crimes in the Caribbean Sea will increase as conditions in the socialist country continue to deteriorate.

“This reminds me of how the problems started off the coast of eastern Africa," said Roodal Moonilal, a politician from Trinidad and Tobago while speaking to the Washington Post. “What we’re seeing – the piracy, the smuggling – it’s the result of Venezuela’s political and economic collapse.”

While the region has seen traffickers use ports in Trinidad to move drugs from Colombia and Venezuela to North America in the past, the new pirates are ratcheting up the violence to levels that haven’t been seen by mariners in the region since the time of Blackbeard.

One witness recounted his experience of being attacked by the pirates to reporters and stated that they were “doused with hot oil, hacked with machetes and thrown overboard, then their boats were stolen."

Although Venezuela has a coast guard, one anonymous Venezuelan port official told the Washington Post that ” Venezuelan coast guard officers have been boarding anchored vessels and demanding money and food,” leaving merchant ships and fishing vessels no choice but to anchor further away from the coast.

Published:8/14/2018 9:51:22 AM
[Markets] Three Things Are Deadly For Emerging Markets, And "Turkey Might Provide The Trigger"

Submitted by Viktor Shvets, Macquarie commodities and global markets head of Asian strategy

Are politics & economics on a suicide course?

Key points

  • An illiberal global order is being compounded by CBs draining liquidity.
  • The flashpoint is now Turkey but the prospect of contagion is real.
  • While Asia ex is less exposed, trade disruption, less liquidity, rising US$ and falling Rmb are a deadly combination. It could go beyond Turkey & South Africa.

Tocqueville strikes again – stress leads to illiberal answers

This week’s Economist had a timely article on Alex de Tocqueville whose classics ‘Democracy in America’ and ‘The Old regime and the French Revolution’ were the reference books for liberals like John Stuart Mill and autocrats like Xi Jinping. They guided democrats how to avoid destruction of liberal order while being equally useful to autocrats on how to avoid revolutions.

What has it to do with emerging markets? EM equities do best when volatilities are low, environment is predictable, capital flows freely and trade expands. However, as we have been highlighting, this outcome is becoming increasingly less likely. As de Tocqueville warned, while liberal order requires democracy, democracy does not necessarily lead to free and liberal order. When pressures rise, democracies frequently turn to xenophobic and protectionist policies. In such times, people do not want freedom, they want help. In our view this explains recent trend towards more illiberal causes and politicians, whether in the US, Turkey, Poland, Hungary, Italy, Mexico, Phil or India. It is not relevant whether a country lurches to the left (Mexico) or right (Turkey), the outcomes are less freedom, greater state control and international disruption.

Turkey is a canary in the coal mine; watch global liquidity & China

While history does not repeat itself, it does rhyme, and while de Tocqueville could not envisage CBs role in economic and political life, he did warn about dangers of state centralization. This brings us to Turkey. For the last decade, Turkey’s political and economic climate has become less liberal and more centralized. A hopeful spring of early 2000s, when Turkey seemed to have a realistic chance to escape never ending cycles of extreme lurches between free markets and statism and between inflationary/currency crises and periods of technocratic management, is all in the past. While in 2010, there was still a question whether Turkey would continue along liberal path, by now it has become clear that the answer is no. Also, worryingly, this time, illiberal Turkey is meeting an illiberal US and an increasingly autocratic and illiberal world.

Economic mismanagement (twin deficits are ~9% of GDP while inflation is ~15%), and ‘strong man’ stand-off between US and Turkey, has driven TRY to an unheard of levels of 7:1, raising a realistic prospect of capital controls, defaults and greater interference in CB policies, capital flows and businesses. As in the case of Greece, the danger of Turkey is not its own debts (even Eurozone banks’ impact is likely to be manageable) but contagion. As usually, the weakest (e.g. SA) are the first in the line of fire. The good news for Asia ex is that even most exposed (Indo, Mal, Phil & India) are far better positioned.

The concern is that lurches towards protectionism and trade wars are now compounded by Fed policies to drain liquidity and raise cost of capital, almost irrespective of consequences for a wider world. Even ECB and BoJ are being reluctantly dragged along. At the same time, China is caught in the middle of its de-leveraging, and it clearly uses Rmb to help economy and reduce trade drag. Less liquidity, rising US$ & declining Rmb are deadly for EM equities. Turkey might just provide a trigger. Watch China and how it manages liquidity

Published:8/13/2018 9:46:14 AM
[Markets] Turkish State Media Exposes The American Empire & Its Media

Amid growing diplomatic tensions between the U.S. and Turkey, Turkish TV station 'A Haber' on Saturday presented a detailed segment on 'The American Empire and its Media', based on an infographic tweeted out earlier this year by WikiLeaks founder Julian Assange and showing the surprisingly close interrelations between U.S. mainstream media and key foreign policy institutions.

This anti-American propaganda (if that is what one calls a foreign nation daring to expose the truth about America), comes in the wake of various speeches and after Erdogan wrote a Friday New York Times op-ed cataloging  his grievances and threatening to walk away from the decades-old alliance. "Failure to reverse this trend of unilateralism and disrespect will require us to start looking for new friends and allies," he wrote. Meanwhile, while announcing the new sanctions aimed at Turkey, Trump tweeted his "analysis" of the situation: "Our relations with Turkey are not good at this time!"

The escalating war of words continued all weekend, when speaking at a rally in the Black Sea town of Unye, Erdogan said that "it is wrong to dare bring Turkey to its knees through threats over a pastor," and blasted "shame on you, shame on you. You are exchanging your strategic partner in NATO for a priest." At the same time, Ibrahim Kalin, Erdogan’s spokesman, said that the U.S. is "facing the risk of completely losing Turkey."

And if anyone was hoping that Erdogan's temper would have cooled one day later with just hours left before FX markets reopen, they were sorely disappointed on Sunday when in his latest public address in the town of Trabzon, Erdogan doubled down on his belligerent rhetoric against the US once again, via Bloomberg:


Here one assumes that by "they" Erdogan was referring to the US, even though the Turkish's president official line all along was that the culprit behind the "failed coup" was the exiled cleric Fethulah Gullen who has been accused by Erodgan of being behind the country's imaginary "shadow state" for years, and which gave Erdogan a green light to crackdown on any potential opponents, leading to an unprecedented purge of people in public positions, with tens of thousands of government workers either ending up in prison or unemployed.

Erdogan then continued by calling for all Turks to convert their foreign currency holdings, i.e. mostly dollars, to liras, and warning that "economic attacks will only increase Turkey's unity."

Among the other notable highlights, Erdogan said that "we will say bye-bye to those who are ready to give up their strategic partnership for their relations with terror organizations" and that Turkey can "respond to those who started a trade war against the entire world and included our country in it by gravitating towards new co-operations, new alliances" i.e. China and Russia (which earlier today said it was considering dropping the US dollar altogether in oil trade), and warned that "it is foolish to think that Turkey can be thrown off by FX" although with inflation set to explode as the currency collapses, the local population may have a different view of this. 

Finally, anyone wondering which way the Lira will open later today, Erdogan did his best to make the ongoing collapse accelerate, stating that "we know very well that those who say we should make an agreement with the IMF are saying we should give up on political independence", thus eliminating the possibility of an IMF bailout which together with capital controls were the only two options Turkey had left to arrest the lira's plunge.

As for higher interest rates, a critical requirement to at least slow down the country's economic descent, Erdogan had some words as well:

"They are trying to do with money what they couldn’t with provocations and the coup. This is clearly called an economic war"

"Interest rates are tools of exploitation that make the rich richer and the poor poorer. As long as I’m alive, we will not fall into the interest-rate trap"

And the punchline:


It was not clear what those tools would be, but they certainly would not be welcome by the market.

*  *  *

Here is the original detail that Erdogan is now increasingly highlighting as he uses Trump as the scapegoat for his economy's collapse.

Via Swiss Propaganda Research,

Largely unbeknownst to the general public, executives and top journalists of almost all major US news outlets have long been members of the influential Council on Foreign Relations (CFR). 

Established in 1921 as a private, bipartisan organization to “awaken America to its worldwide responsibilities”, the CFR and its close to 5000 elite members have for decades shaped U.S. foreign policy and public discourse about it. As a well-known Council member once explained, the goal has indeed been to establish a global Empire, albeit a “benevolent” one.

Based on official membership rosters, the following illustration for the first time depicts the extensive media network of the CFR and its two main international affiliate organizations: the Bilderberg Group(covering mainly the U.S. and Europe) and the Trilateral Commission (covering North America, Europe and East Asia), both established by Council leaders to foster elite cooperation at the international level.

In a column entitled “Ruling Class Journalists”, former Washington Post senior editor and ombudsman Richard Harwood once described the Council and its members approvingly as “the nearest thing we have to a ruling establishment in the United States”.

Harwood continued:

“The membership of these journalists in the Council, however they may think of themselves, is an acknowledgment of their active and important role in public affairs and of their ascension into the American ruling class. They do not merely analyze and interpret foreign policy for the United States; they help make it. 

They are part of that establishment whether they like it or not, sharing most of its values and world views.”

However, media personalities constitute only about five percent of the overall CFR network. As the following illustration shows, key members of the private Council on Foreign Relations have included:

  • several U.S. Presidents and Vice Presidents of both parties;

  • almost all Secretaries of State, Defense, and the Treasury;

  • many high-ranking commanders of the U.S. military and NATO;

  • almost all National Security Advisors, CIA Directors, Ambassadors to the U.N., Chairs of the Federal Reserve, Presidents of the World Bank, and Directors of the National Economic Council;

  • some of the most influential Members of Congress (notably in foreign & security policy matters);

  • many top jounalists, media executives, and entertainment industry directors;

  • many prominent academics, especially in key fields such as Economics, International Relations, Political Science, History, and Journalism;

  • many top executives of Wall Street, policy think tanks, universities, and NGOs;

  • as well as the key members of both the 9/11 Commission and the Warren Commission (JFK)

Eminent economist and Kennedy supporter, John K. Galbraith, confirmed the Council’s influence: “Those of us who had worked for the Kennedy election were tolerated in the government for that reason and had a say, but foreign policy was still with the Council on Foreign Relations people.”

And no less than John J. McCloy, the longtime chairman of the Council and advisor to nine U.S. presidents, told the New York Times about his time in Washington: “Whenever we needed a man we thumbed through the roll of the Council members and put through a call to New York.”

German news magazine Der Spiegel once described the CFR as the “most influential private institution of the United States and the Western world“ and a “politburo of capitalism”. Both the Roman-inspired logo of the Council (top right in the illustration above) as well as its slogan (ubique – omnipresent) appear to emphasize that ambition.

In his famous article about “The American Establishment”, political columnist Richard H. Rovere noted:

“The directors of the CFR make up a sort of Presidium for that part of the Establishment that guides our destiny as a nation.

[I]t rarely fails to get one of its members, or at least one of its allies, into the White House. In fact, it generally is able to see to it that both nominees are men acceptable to it.”

Until recently, this assessment had indeed been justified. Thus, in 1993 former CFR director George H.W. Bush was followed by CFR member Bill Clinton, who in turn was followed by CFR “family member” George W. Bush. In 2008, CFR member John McCain lost against CFR candidate of choice, Barack Obama, who received the names of his entire Cabinet already one month prior to his election by CFR Senior Fellow (and Citigroup banker) Michael Froman. Froman later negotiated the TTP and TTIP free trade agreements, before returning to the CFR as a Distinguished Fellow.

It was not until the 2016 election that the Council couldn’t, apparently, prevail. At any rate, not yet.

Published:8/13/2018 12:13:04 AM
[Markets] The CIA's Double Standard Revisited

Authored by Melvin Goodman via,

The Central Intelligence Agency has practiced a double standard for many years.  Former CIA director David Petraeus escaped a jail sentence despite providing eight notebooks of highly classified information, including names of covert operatives, to his biographer-mistress.  Conversely, Reality Winner, a former Air Force linguist, has been in jail for the past year, awaiting sentencing for leaking a classified report about Russian interference in the 2016 elections.  Everyone in the United States is talking about Russian interference in the U.S. elections.

There is nothing new here, however.  Former CIA director John Deutch placed sensitive operational materials on his home computer, which was used to access pornographic sites, but he was pardoned by President Bill Clinton.  Clinton’s national security adviser, Samuel Berger, received a modest fine for stuffing into his pants classified documents from the National Archives.  And Attorney General Alberto Gonzales was not even charged when he kept sensitive documents about the NSA’s massive surveillance at his home.  Conversely, my good friend Tom Drake was charged with violations under the Espionage Act for “mishandling” what turned out to be unclassified information.

Now we have recent examples of a double standard that is abetted by the media. 

Over the past week, former high-level CIA officials have written opeds for the Washington Post dealing with drone warfare and information warfare.

On August 6, Bernard Hudson, the former director of counterterrorism at the CIA, wrote about the “new peril” of weaponized drones in the “hands of non-state actors.”  There is a far greater problem regarding drone warfare, and that is the secretive counterterrorist infrastructure in the United States and elsewhere that sustains endless, borderless wars in places far removed from actual battlefields.  The U.S. practice of “targeted killing”—the extrajudicial killing of suspected terrorists and militants—raises serious moral and legal issues.

The CIA, however, would not allow me, a former CIA officer to deal with such U.S practices.  Material in one of my books dealing with U.S. drone war was redacted.  There have been numerous articles in the mainstream media dealing with drone warfare, but the CIA considers this discussion classified.  The fact that President Barack Obama discussed this issue publicly on many occasions had no impact on CIA’s publications review process.

On August 8, Mike Morell, the former deputy director at the CIA, wrote an oped on the dangers of Russian information warfare against the United States.  Morell is fully knowledgeable of U.S. information warfare against Russia, but never would have received permission from CIA’s Publication Review Board to discuss U.S. activities.  It would be useful to have an understanding of these programs in order to make the case for bilateral dialogue to resolve differences and create ground rules for behavior.  Morell wants to “impose severe costs” on Russia; perhaps it would be better to engage in constructive diplomacy before worsening bilateral relations.

It is noteworthy that these opeds appeared in the Washington Post, whose masthead proclaims that “Democracy Dies in Darkness.”  In fact, the Post is an enabler of such darkness when it allows former intelligence officers to engage in polemical and one-sided accounts of serious problems that deserve a fuller discussion.

Even more serious is the threat to the First Amendment free speech rights when former intelligence officers are not permitted to discuss sensitive matters that are no threat to American national security.  Several years ago, the CIA cleared for publication the memoirs of two senior officers with more than 70 years of professional experience who claimed there was no such thing as torture and abuse.  John Rizzo, a senior career lawyer at the CIA, and Jose Rodriguez, a senior operative who ordered the destruction of the 92 torture tapes, denied that the CIA conducted torture and abuse.

Recently, when I tried to write about the confirmation process for CIA director Gina Haspel, I was prevented from discussing aspects of her career that dealt with the issue of torture and abuse.  Once again, there was no threat to American national security and there was ample documentation from the mainstream media, but the CIA considered the issue to be classified.  One way to address the darkness that beclouds our democracy is to conduct a serious reform of government censorship of its public servants.

Published:8/11/2018 5:05:58 PM
[Books] CRB: Twin peaks (Scott Johnson) This week we have previewed three stellar essays from the new (Summer) of the Claremont Review of Books (subscribe here). Forgive me for repeating myself: it is an invaluable magazine for those of us who love trustworthy essays on, and reviews of books about, politics, history, literature, and culture. We conclude our preview this week with a bonus, our own Steve Hayward’s review of Lewis Lehrman’s Lincoln & Churchill: Two Published:8/10/2018 7:57:11 AM
[Markets] Hitler & Trump: "The Great Man" Theory Debunked

Authored by Gerold via,

We’re told that great leaders make history. Like so much of what we are taught, that’s a load of bunk. Yes, great leaders make it into the history books, but they do not make history. You make history. I make history. All we dirt people together make history. Government-run schools don’t teach us this because it makes us easier to control.

The “Great Man Theory” [Link] tells us that history can be largely explained by the impact of great leaders. This theory was popularized in the 1800’s by the historian and social commentator Thomas Carlyle  [Link] The Great Man Theory downplays the importance of economic and practical explanations. It is an appealing theory because its simplicity offers the path of least resistance. That should ring an alarm.

Herbert Spencer [Link] forcefully disagreed with the “Great Man Theory.” He believed that great leaders were merely products of their social environment. “Before he can remake his society, his society must make him.” Tolstoy went so far as to call great leaders “history’s slaves.” However, this middle ground still misses the mark.

At the other extreme is “history from below” [Link] aka ‘the people’s history.’ “History from below” takes the perspective of common people rather than leaders. It emphasizes the daily life of ordinary people that develop opinions and trends” as opposed to great people introducing ideas or initiating events.” Unfortunately, this too is only half the equation, and it is no surprise that it appeals to Leftist and Marxist agendas.

Having studied politics and history ever since the assassination of John F. Kennedy in 1963, I determined that although history is partly the environments and individuals shaping each other reciprocally, it is more than that. It is you and I who make history with every decision we make, every dollar we spend, everything we learn, every vote we cast and every opinion we voice. It’s even what we don’t do. It is mostly organic and cannot easily be explained in a simple, linear fashion the way the aforementioned political philosophers tried.

Great leaders are merely the right person at the right time and place. However, they do not lead so much as follow from the front. They stick their finger in the air to see which way the wind blows. They may be brutes, bullies or demagogues, but they are sensitive enough to understand the zeitgeist, the spirit of the times and so, they adjust their message accordingly.

That is one reason Jimmy Carter was a failed President. He was a nice guy, but he did not get an accurate reading of the times. Instead, he acted on the wishful thinking that is characteristic of liberals.

One of the significant shortcomings of many political philosophers is their ignorance of human nature. That is why Collectivism in all its forms appeals to the downtrodden. “Share and share alike” is a beautiful ideal so long as you get other people’s stuff, but the flip side of the coin is not quite so appealing.

I heard a radio interview with a self-avowed Communist:

“So do you believe in ‘share and share alike?”

“Yes, I do.”

“And, if you had more than one house, you’d give them away and keep just one for yourself?”

“Yes. I would.”

“And, if you had more than one vehicle, you’d give them away and keep just one for yourself?”

“Yes, I would.”

“And, if you had more than one shirt …”

“Whoa, wait a minute! I have more than one shirt.”

I can’t remember the rest of the interview as I was laughing too hard.

The Great Man Theory is one extreme, its critics are somewhere in the middle and ‘the history of the people’ is at the other end of the spectrum. Despite this, we are still fascinated by great leaders. That is human nature. Whether we are slaves at heart, or lack self-confidence or some other explanation is endlessly debatable. However, the fact remains that we are fascinated by great leaders and our inability to understand them further disproves the accepted theories.

Adolph Hitler is the ultimate example of our fascination with a great man. According to Alex Ross’s “The Hitler Vortex,” [Link] tens of thousands of books have been written about Hitler. “Books have been written about Hitler’s youth, his years in Vienna and Munich, his service in the First World War, his assumption of power, his library, his taste in art, his love of film, his relations with women, and his predilections in interior design (‘Hitler at Home’).”

Tens of thousands of books failed to explain Hitler. Ross, too, does no better when he writes, “What set Hitler apart from most authoritarian figures in history was his conception of himself as an artist-genius who used politics as his métier. It is a mistake to call him a failed artist; for him, politics and war were a continuation of art by other means.”  WTF? Are we to believe Hitler was simply an artist who used the world as his canvas? Equally pointless is the notion that, “Hitler debased the Romantic cult of genius to incarnate himself as a transcendent leader hovering above the fray.”

Although he was a brilliant orator, Hitler’s failures are too innumerable to list.  [Link] He was certainly a failure as a painter and his General staff considered him an incompetent military strategist (fortunately for the Allies.) However, Hitler was merely the right man at the right time and place to achieve power. As Ross explains, Hitler was, “the result of a large protest movement colliding with complex patterns of elite self-interest, in a culture increasingly prone to aggressive mythmaking and irrationality.”  That sounds all too close to home, doesn’t it?

Enter Donald Trump; the right man at the right time and place. He’s a brute, a bully, and a demagogue, but he understands the zeitgeist, the spirit of the times and he adjusts his message to appeal to his base.

I have known many bullies; on the playground and in the boardroom. A bully may achieve short-term gain, but for long-term pain. It is very easy to destroy corporate culture, but extremely difficult, if not impossible, to mend a toxic workplace after the bully was dismissed. Now, extrapolate this to the world under Donald Trump.

John Feeley is the former U.S. Ambassador to Panama portrayed in The New Yorker magazine article “The Diplomat Who Quit the Trump Administration.” [Link] After his first meeting with Trump, he wrote that Trump “saw every unknown person as a threat and that his first instinct was to annihilate that threat. ‘He’s like a velociraptor. He has to be boss, and if you don’t show him deference he kills you.'” 

Feeley fears that “the country was embracing an attitude that was profoundly inimical to diplomacy … ‘If we do that … we will become weaker and less prosperous.’” He is correct in that regard. China is building a large, new embassy at the mouth of the Panama Canal visible to every ship “as they enter a waterway that once symbolized the global influence of the United States.”

Feeley is also correct in warning that the Trump administration’s gutting the diplomatic corps will have negative repercussions. Throughout Latin America, leftist leaders are in retreat, and popular movements reject corrupt governance. Yet, Amerika is losing “the greatest opportunity to recoup the moral high ground that we have had in decades.” Instead, the U.S. is abandoning the region to China. Feeley calls it “a self-inflicted Pearl Harbor.”

China is replacing U.S. influence in Latin America and Chinese banks “provided more than a hundred and fifty billion dollars in loan commitments to the region … In less than two decades, trade between China and Latin America has increased twenty-seven-fold.”  Although that began long before Trump, “We’re not just walking off the field. We’re taking the ball and throwing a finger at the rest of the world.”

Feeley says that he felt betrayed by what he regarded as “the traditional core values of the United States.”  Sorry, Feeley, but Amerika lost its core values long before Trump was elected. Trump is not the cause; he is the symptom, the result of the declining Amerikan Empire.

Hunters know that one of the most dangerous animals is a wounded one. The same is correct about failing empires because they are a danger not only to others but to their own citizens as well. The elites are running out the clock in order to loot as much as they can before it hits the fan.

We dirt people will continue to suffer from stagnant wage growth while the so-called increase in national wealth goes to a tiny minority. [link]

Moreover, nobody wins a trade war that raises consumer prices even if Trump eventually triumphs.

The economy staggers under the weight of phony wars, fake finances, fake GDP, fake CPI, fake employment, fake pensions and fake everything. [Link] The national debt increases $1 trillion every year, consumer debt is at an all-time high [Link] while the tax cuts benefit only the ultra-wealthy. Also, the fake news tells us everything is wonderful. Don’t believe it. “If everything is so awesome, why are Americans drinking themselves to death in record numbers?” [Link]

It is said that every few generations, money returns to its rightful owners. That is what’s happening now.

Amerika emerged relatively unscathed from the Second World War whereas many other countries were bombed back into the Stone Age. The Marshal Plan helped rebuild countries that were to become both America’s future customers and its competitors. Amerika’s busy factories transformed from war production to consumer goods, the demand for which was created by “the Father of Spin” Edward Bernays’ marketing propaganda. [Link]

As well, the U.S. stole the gold that the Nazis had stolen from others, [Link]  and that wealth in addition to robust, productive capacity temporarily propelled the U.S. far ahead of other nations. However, it would not last. Eventually, the undeserved prosperity of the 1950’s and ‘60’s began to run out of steam as other nations rebuilt and competed with the U.S. President Nixon defaulting on the dollar in 1971 by “closing the gold window” signaled the end of Amerika’s good times. The subsequent debt creation now unconstricted by a gold basis helped to cushion the blow for several decades, but wealth was now flowing to Asia along with factory jobs.

For 5,000 years, China was a world superpower with only a short, two-century hiatus that is now ending as China again emerges as an economic superpower. Such a massive shift in wealth cannot be attributed to either leadership or the people below. It is a painful reversion to the mean. All the finger-pointing and wailing and gnashing of teeth … not even bombastic Trump and his tariffs can stem the tide and make Amerika great again as money continues to flow back to its rightful owners.

The USA is a declining, bankrupt, warmongering police state and most of its indoctrinated citizens think they live in a free, peaceful country.

China is a corrupt police state, but most of its citizens know it.

We have met the enemy, and he is us. The future awaits.

Published:8/9/2018 10:24:49 PM
[Entertainment] Chic Media founder Rachel Hollis: How I became a motivational powerhouse for women Between a podcast, a media company, six books — including bestseller Girl, Wash Your Face — four kids, and producing conferences, it’s safe to say that Rachel Hollis doesn’t have much free time. USA TODAY caught up with one Inc’s Top 30 Entrepreneurs Under 30 to talk about everything.
Published:8/9/2018 11:52:08 AM
[Books] CRB: Radical prophet (Scott Johnson) In the third of the three review/essays I chose to preview for Power Line readers from the new (Summer) issue of the Claremont Review of Books (subscribe here), Mark Bauerlein surveys the works of David Horowitz after his turn from the radical left. Bauerlein is professor of English at Emory University; he has not previously written for the CRB, but he was an inspired choice to review my friend David’s Published:8/9/2018 6:51:18 AM
[Books] CRB: Sowell’s inconvenient truths (Scott Johnson) We continue our preview of the new (Summer) issue of the Claremont Review of Books hot off the press. It is in the mail to subscribers now. Buy an annual subscription including immediate online access here for the modest price of $19.95. It is an invaluable magazine for those of us who love trustworthy essays on, and reviews of books about, politics, history, literature and culture. I reviewed the new Published:8/8/2018 7:38:06 AM
[Gadgets] This hack turns your old Kindle into a clock If you have an old Kindle e-reader lying about then you’d best dig it up. This cool hack can turn your dead e-reader into a living clock that scours hundreds of books for exact times and displays the current time in a quote. It updates once a minute. The project, available on Instrucables, requires a […] Published:8/6/2018 1:44:15 PM
[Terrorism] Robert Spencer Exposes Islam’s Problematic History

By Christine Douglass-Williams Robert Spencer’s extraordinary new book, The History of Jihad: From Muhammad to ISIS (Bombardier Books), tells the little-known yet crucially important story of the victimization of Christians, Jews, Hindus, and other non-Muslims in jihadist warfare for fourteen centuries. The History of Jihad goes right up to the present day, and is a ...

The post Robert Spencer Exposes Islam’s Problematic History appeared first on Godfather Politics.

Published:8/6/2018 1:19:10 PM
[Terrorism] Robert Spencer Exposes Islam’s Problematic History

By Christine Douglass-Williams Robert Spencer’s extraordinary new book, The History of Jihad: From Muhammad to ISIS (Bombardier Books), tells the little-known yet crucially important story of the victimization of Christians, Jews, Hindus, and other non-Muslims in jihadist warfare for fourteen centuries. The History of Jihad goes right up to the present day, and is a ...

The post Robert Spencer Exposes Islam’s Problematic History appeared first on Godfather Politics.

Published:8/6/2018 1:19:10 PM
[Markets] Stock Market Manias Of The Past Vs 'The Echo Bubble'

Authored by Pater Tenebrarum via,

The Big Picture

The diverging performance of major US stock market indexes which has been in place since the late January peak in DJIA and SPX has become even more extreme in recent months. In terms of duration and extent it is one of the most pronounced such divergences in history. It also happens to be accompanied by weakening market internals, some of the most extreme sentiment and positioning readings ever seen and an ever more hostile monetary backdrop.


Who’s who in the zoo in 2018

The above combination is consistent with a market close to a major peak – although one must always keep in mind that divergences can become even more pronounced – as was for instance demonstrated on occasion of the technology sector blow-off in late 1999 – 2000.

Along similar lines, extremes in valuations can persist for a very long time as well and reach previously unimaginable levels. The Nikkei of the late 1980s is a pertinent example for this. Incidentally, the current stock buyback craze is highly reminiscent of the 1980s Japanese financial engineering method known as keiretsu or zaibatsu, as it invites the very same rationalizations.

We recall vividly that it was argued in the 1980s that despite their obscene overvaluation, Japanese stocks could “never decline” because Japanese companies would prop up each other’s stocks. Today we often read or hear that overvalued US stocks cannot possibly decline because companies will keep propping up their own stocks with buybacks.

Of course this propping up of stock prices occurs amid a rather concerning deterioration in median corporate balance sheet strength, as corporate debt has exploded into the blue yonder (just as it did in Japan in the late 1980s). The fact that an unprecedented number of companies is a single notch downgrade away from a junk rating should give sleepless nights to fixed income and stock market investors alike –  as should the oncoming “wall of maturities”.

A giant wall of junk bond maturities is looming in the not to distant future. Unless investors remain in a mood to refinance all comers, this threatens to provide us with a spot of “interesting times”. Something tells us that “QT” could turn into a bit of a party pooper as the “Great Wall” approaches.

It should also be mentioned that past stock market peaks as a rule coincided with record highs in buybacks. This indicates that record highs in buybacks are mainly a contrarian indicator rather than a datum providing comfort at extreme points.

Of course, what actually represents an “extreme point” can only ever be known with certainty in hindsight, as extremes tend to shift over time – particularly in a fiat money system in which the supply of money and credit can be expanded willy-nilly. What can be stated with certainty is only whether the markets are entering what we would call dangerous territory.

Stock buybacks are zooming to unprecedented heights

From an anecdotal evidence perspective the continued existence of curmudgeons like us who are aware of the above and are pointing out that this is a dangerously overstretched market may actually be a good reason to believe it will become even more overstretched. When the bubble pops one of these days, we may superficially look like the proverbial stopped clock that finally showed the right time – note though that our views on the big picture and our short term tactics are two different cups of tea.

After all, we even trade cryptocurrencies, which are well beyond fundamental analysis – this is to say, we don’t believe it is possible to assign a “proper” valuation to them. We don’t know if a Bitcoin is worth nothing (that seems unlikely though) or a million dollars. What we do know is that it is a market that is extremely suitable for short term trading based on technical analysis.

In terms of long term investment strategies we prefer methods that eschew market timing altogether. We mainly rely on a specially adapted version of the permanent portfolio (which is extensively discussed in Austrian School for Investors, a book we modestly contributed to and warmly recommend, mainly for the contributions of the other authors).

Moreover, the “big picture” can only be judged once the cycle has fully run its course.

Diverging Indexes and Major Stock Market Tops

In view of the growing intra-market divergences mentioned above, we decided to create a few comparison charts which show three major market indexes on occasion of major stock market peaks of the past three decades, plus one additional indicator, namely the spread between 2- and 10-year US treasury yields as a proxy for the yield curve.

The indexes are the Dow Jones Industrial Average (DJIA – not really an index, but a price-weighted average), the NDX (a proxy for big cap technology stocks) and the NYSE Composite (NYA – a proxy for the broad market). We have chosen three major turning points, namely the 1987, 2000 and 2007 peaks, which we compare to today’s situation.

The charts follow in chronological order, starting with 1987.

The 1987 top: the DJIA and the NYA topped at the same time and also and made a secondary lower high concurrently, but the NDX diverged from them by making a higher high on occasion of the secondary peak – this is par for the course at major market peaks. Interestingly the crash of 1987 did not presage an imminent recession. A recession occurred much later (in 1990), but by that time the market had already regained the losses it had suffered in the crash. Note that the yield curve did not invert prior to the crash – in fact, the low of the 2-10 spread was at a relatively high 75 basis points – the spread did explode to 140 basis points as the crash unfolded, but it provided no actionable advance warning. So much for the theory that “nothing bad can happen before the yield curve inverts”.

The flame-out of the tech mania in early 2000. Once again there was a divergence between the peaks in DJIA and NDX, but it was extremely large on this occasion. After its initial 36% crash in April of 2000 the NDX proceeded to lose a rather disconcerting 83% of its value over the next two years. At the peak, the NYA diverged from both DJIA and NDX, but in this case by being the last index to top out. The reason for this was in our opinion that value stocks had already declined for more than two years by the time the mania peaked, and there was a big rotation from growth to value when the Nasdaq crash began, as value stocks were genuinely cheap at the time. The yield curve had inverted rather dramatically, but it gave no advance warning – rather, the lowest point of the 2-10 spread – a negative -52 basis points – coincided perfectly with the low of the initial crash wave in the NDX.

The 2007 market peak was a bit trickier, as there was actually no outright divergence between the three indexes. However, at the secondary peak in early October the NDX outperformed the other indexes substantially, as the “flight to fantasy” (i.e., into the most overvalued market sectors) we always see at major peaks was once again in full swing. This time the yield curve did provide an advance warning: the 2-10 spread had inverted and bottomed in late 2006 already, and was expanding noticeably by the time equities made their top. We believe this happened because the recession in the housing sector had started in 2006 already, around the time the Bank of Japan cut its balance sheet by 25% almost overnight as it reversed its previous “QE” policy. The bond markets evidently sensed that this would eventually lead to broad-based recession which would force the Fed to abandon and reverse its baby-step tightening policy.

And here is finally today’s situation (read here why we call it the “echo bubble” – explanation at the end of the article). There is once again a major divergence between DJIA/NYA and the NDX, which is outperforming the former two quite noticeably since the late January peak and has streaked to new highs. The deterioration in market internals is highly reminiscent of that seen on occasion of previous market tops, as an ever smaller number of big cap stocks  – mostly in the tech sector – is driving the advance. The so-called FANG stocks (FB, AMZN, NFLX, GOOGL) currently trade at around 9 times revenues, the highest ever. Including AAPL they now represent around 11% of the S&P 500 index – which recently reached an interim high while only 3% of its components actually made a new high. The 2-10 spread has recently made a low at a positive 24.7 basis points and has since climbed to 32 basis points. Similar to 1987 and 2000 we do not expect a major advance warning from this indicator, especially in view of the fact that a ZIRP regime has been in place for several years. Japan serves as a historical example: the last 5 recessions and bear markets in Japan all started without a preceding yield curve inversion. The last time a major market peak in Japan was preceded by an inverted yield curve was in 1989. How will the 2018 divergence between the indexes play out? We cannot be certain, but we do believe it represents a major warning sign. Keep in mind that it is not necessary for a recession to be imminent: a very overvalued and over-loved market with weak internals can crater at any time, it does not have to presage a recession. As an aside, there is a major difference between the year 2000 peak and the current situation: while growth has vastly outperformed value in both eras, this time value stocks are definitely not cheap. Rather, the “everything bubble” has pushed the valuations of almost all sectors to extremely lofty levels. There may well be rotation, but it probably won’t be as pronounced as it was after the top of the tech mania in 2000. An equal opportunity massacre seems far more likely this time around.

Measures of Giddiness

We mentioned extremes in sentiment and weak internals above and wanted to show a few pertinent examples. The charts below illustrate why there is good reason to be concerned about the divergences that have developed in recent months.

This chart mirrors margin debt – it shows “available cash”, which has recently reached a record negative USD 331 billion. Obviously, conviction is stronger than ever (note the positioning of the “excessive optimism” line).

Purchases of calls by small traders (newly opened positions) have exploded to new highs –  and the recent peak actually diverged from the SPX (though not from the NDX, which may be more relevant in this case). If there is a “wall of worry”, this group of traders does not see it.

The RYDEX leveraged bull-bear asset ratio has made a new high at 24 in late January and has put in peaks above the 20 level two more times since then.

The number of buy and sell recommendations on AMZN (we found this chart also via sentimentrader). The ratio is currently 48:1, which in a sense is an improvement, as there were zero sell recommendations previously. Look at where the ratio stood in late 2002 when AMZN could be bought for $5 (in words: half a sawbuck). They sure hated it in late 2006, when sell recommendations actually exceeded buy recommendations – it traded at $25 at the time. Well, they really love it at $1,740 (current level $1,830 – still getting the same amount of love).

Cash is trash: the ratio of US equity market capitalization to money market assets has recently left the solar system and has now reached the Oort cloud. It certainly does not look as if anyone is worried about the possibility of a stock market downturn.

We could continue along this line ad nauseam, but you probably get the drift by now. Lastly, here is an update of a chart we frequently show because it has been quite useful in the past, the SPX new high-new low percentage index. It remains extremely weak and is only a small step away from giving a new sell signal – which is quite astonishing considering the strength in the index:

New high-new low percentage index – we have left our annotations from the last update on the chart, which point out that the market failed to reach “oversold” status in the February decline. The rebound has been very weak and is a strong hint that another decline is in the offing (compare to the situation prior to the sell-offs in August 2015 and January-February 2016).


The conclusion from all this is obviously that risk is currently very high. Of course risk also spells opportunity, and anyone who has to have exposure to the stock market should at least consider hedging it while hedges can still be had for a song (which invariably is the case just before things go awry).

We leave you with one last chart that shows a fundamental datum – year-on-year growth of US federal tax revenues. Note that this shows the situation until the end of Q1 2018, this is to say prior to the tax cut taking effect. It flies into the face of the “strong economy” narrative and indicates to us that much of the economy’s strength was probably based on government spending.

A more comprehensive list was provided by Northman Trader from whom we have pinched the chart of buybacks shown above – as he puts it:

So if anyone tells you the economy is expanding show them this thread. It’s not. GDP growth in Q2 was inventory build, tariff front loading and debt financed consumer spend. Key drivers of the economy are not expanding. What is expanding is massive deficit spending and buybacks.

Negative growth in federal tax receipts is normally associated with the onset of recessions rather than economic booms. This datum is clearly at odds with the “strong economic expansion” narrative.

Addendum: as we have found out in the meantime, withholding tax reductions resulting from the tax cut started in mid February already, which has definitely contributed to the decline. Nevertheless, growth in tax receipts had already decreased to just 0.55% in Q4 2017 and has been in a downtrend since peaking at 21.23% in Q2 2013, so the tax cut has merely exacerbated a trend that was already well underway.


Modern-day hi-tech bear hunt…

Published:8/5/2018 12:06:27 PM
[Markets] Gold...Yuan...Crypto...

Authored by "Dr.D" via Raul Ilargi Meijer's Automatic Earth blog,

It’s been a while since we last heard from Dr. D, but here he’s back explaining why neither gold nor the yuan nor cryptocurrencies can or will replace the dollar as the reserve currency, but together they just might:

Dr. D:

 “Some debts are fun when you are acquiring them, but none are fun when you set about retiring them.” –Ogden Nash

Over the last year or two there’s been discussion about the U.S. Federal spending moving beyond $4 TRILLION dollars, and whether a $1+ trillion dollar annual deficit, on top of a $20 Trillion national debt – Federal only – is sustainable. It isn’t.

“What can’t go on, doesn’t” is the famous quote of economist Herbert Stein. Since a spiraling deficit of $1 trillion deficit on a $20 trillion debt can’t go on, what will we replace it with when it very soon doesn’t? Historically gold. Whatever gold exists in the nation’s coffers, whether one coin or 8,000 tons, is used to as the national wealth, and fronted by paper to re-boot the currency. With some additions such as oil and real estate, this was the solution in Spain, France, Germany, and the Soviet Union among hundreds of fiat defaults. Why? Because at a time of broken promises — real goods, commodities that can be seen, touched, and used – are the tangible proof of wealth, requiring no trust, and from which the human trust system of paper and letters of credit can be rebuilt.

But in these complicated, digital times perhaps that’s too simplistic. Perhaps we have grown smarter than all our fathers and this time it will be different. Will it really be the same? Let’s look at how the system works now.

Before WWI, the world was on the gold standard. This had variations, exceptions, corruptions, but on the whole there was gold in the back that was fronted by paper promises issued by private banks. The paper moved, the promises were delivered by telegraph and telephone, and the gold remained in the vaults. It was only when men felt unsure of the truth of the promise they could and did demand delivery, called the bluff, and the bank did – or ominously didn’t – deliver the gold, and thereby keep the paper system in line with reality, with real wealth, and with the economy. This method kept men and nations honest, mostly.

The main part is that the gold didn’t move: it stayed in the same vaults and its ownership changed, just like today. It didn’t matter how much gold existed: it simply changed price, just like today.

All this changed after WWI. The nations had so impoverished themselves that they could no longer repay their real debts and restore their currencies following a 1,000 year tradition of inflating during wars and deflating after. The deflation was too high for Britain and France even while removing the total wealth of Germany, and they began to cheat, double-counting the gold on their books to relieve the pressure. And so the non-gold system began. With other causes, the inflation of this change began to be felt through the Roaring 20’s, until when the phantom money was called on – as was tradition when people began to suspect that the paper they owned was no longer backed with adequate real goods – the illusion popped.

The inflation was shown to be a fraud supported by the highest powers in government and finance, and the real economy withdrew their lack of trust until the matter was fixed. It wasn’t. As the system was fundamentally unchanged and no trust was restored, the rich were protected and law and property rights were trampled in a decade of Tom Joads, the economy never recovered. Although destroying half the nations on earth restored the real balance between paper fantasy and real production, the unemployment that never existed before WWI was never cured and has continued, ever worsening to this day. But note: before, during, and after the Depression, there was the same amount of gold. The gold did nothing, it was meaningless, only the paper promises over it expanded and contracted.

With the systemic dishonesty still in place preventing the books from matching the real wealth and production, the economy soon returned to a diseased state. While gold was illegal for men to own, the rich do as they please and as tradition, removed the gold of the United States to hold them to truth and honesty from printing too much fake money for guns and butter. They withstood the 12 year bank run until, in 1971, they folded, having lost 2/3s of the national savings, gold.

The world was now in uncharted territory. Much more than they never returned to honesty and a gold standard after WWI, they never attempted it after WWII, going to the -Bretton Woods” standard: the world would use the US$ as the standard, and the US$ would be backed with their 20,000 tonnes of gold. Now there was no gold, no gold standard, only unbacked US$ paper, a debt you could neither call on nor prove. As Nixon’s Treasury Secretary Connally said: “the dollar may be our currency, but it’s your problem.’

Inflation started immediately, and as the U.S. still resisted re-establishing physical trust, the connection between the books and reality, they quickly spiraled into South American malaise and high inflation, as seen in the gold price. From $20/oz, or rather a dollar value of 0.029, the dollar ran to 0.0011 – 1/26th of its former price — and looked to disappear altogether. This was not unexpected as fiat currencies on average live 40 years before collapsing. If you take 1941 as the start date, the unbacked US$ would have collapsed in 1981, exactly when it did. What to do? How to re-start the system without having to actually reform, give up war, be honest, and return to trust?

Henry Kissinger had the plan. As no one on earth was on the gold standard – not really – the US$ had only two legs, its worldwide use and military force. He made use of them both by demanding the Saudis accept only US$ for oil transactions. Although U.S. production was diminishing, the U.S. and Saudi Arabia were still the two largest oil producers at that time. Most other nations imported oil, especially Europe.

To have assurity of access to that oil — and not run afoul of the U.S. military – they needed to keep a substantial portion of their national accounts in US$, or more technically U.S. Treasury debt, sparking not just the ability, but the REQUIREMENT of a massive U.S. deficit. Kissinger just discovered social media: the truth that virtual things have value simply because other people use them. This was for all practical purposes the first virtual currency, existing only in room-sized mainframes in central banks worldwide. The world’s currency now looked like this:

(Courtesy of Dr. Willie)

A virtual currency backed by nothing, based on the usage in trade. But that isn’t a full chart and isn’t meant to be. On the side, back in the corners, the US$ was still convertible to gold for the “right kind of people”, using delivery in NY and London to banks in Switzerland. The volumes of US$ grew to trillions while the gold component withered to billions, yet still the Saudis banked billions in gold before it was recently stolen from their Swiss accounts, lawsuits pending. Why? Because there is still no trust between nations and billionaires who have a long history of cheating each other. The gold-in-hand safety valve existed to retain some trust, however distant, in the now-digital system.

“Gold is a currency. It is still, by all evidence, a premier currency, where no fiat currency, including the dollar, can match it.” –Alan Greenspan, 2014 interview of the Council on Foreign Relations.

So is the system still gold backed with gold as the “premier”, that is, first, real, and primary currency as Greenspan said? You tell me:

Apart from the Iraq war, the price of oil has been stable for 50 years. In 1950, two silver dimes would buy a gallon of gas. In 2018 two silver dimes are worth $2.22, or the price of a gallon of gas, minus the new taxes. Meanwhile the US$ value has dropped steadily:

Doesn’t that mean that it’s still gold and not the dollar that is the standard, the “store of value”, and the “reserve currency”, however unspoken? If not and it’s a relic, a rounding error we cannot return to, why, as Ben Bernanke was asked, do all the banks and nations still own it?

Back to the $20,000,000,000,000 debt the U.S. as reserve currency was REQUIRED to issue, it’s now been 40 years since 1978: what happens when the U.S. Dollar disappears as all fiat currencies do? Because it seems we would have to do something. It may be that even before 1988, people already knew this conversion, this transfer, must happen roundabout 2018:

If the old currency burns as predicted 30 years ago, what next? Will it be replaced by a gold coin or a “zero” coin, chained under the fleur-de-lis? It would seem the new currency must be trusted, which is the original problem, must be a replacement in trade, and must be large enough to handle what are now multi-billion trade and multi-trillion Forex flows. Is the answer gold? Well yes…and no. Certainly China thinks so:

And Russia:

And for that matter Germany and Holland and even Texas, who have repatriated their gold back home. But there’s one little problem:

These are the official western gold reserves; however, while the gold base remained stable, the overall financial system has expanded. This can be seen in all paper assets, but a good example can be found here:

That’s what? A 20,000-fold rise? And this is only marking “credit”, not equities or cash. We are indeed in an inflationary period: inflation in assets owned by the 1%. How out of line is this? Here’s the kindred chart in productive terms, GDP:

A 9-fold increase in ability versus 20,000-fold increase in promises. Sounds like someone won’t get paid. And you know what bankers and economists call that?

Default. Massive, system ending default, the size of WWI or the Great Depression. That’s how fiat standards end.

How big would that be? Here are some relative sizes:

Actually, that’s pretty understated. Derivatives in 2018 may be as much as $2 QUADRILLION. No one knows. Compare to this:

$3 Trillion in gold. Now that’s “official” gold and we already showed that “official” Chinese gold is 4,000 tonnes when it may be as high as 30,000 tonnes, but the principle is the same: gold is wildly smaller than the needs of the financial system. Or is it? In previous financial inflations…which I just showed we have had since 1971, in 20,000x scale…gold simply rose until it became the right size.

It’s perfectly simple. Gold rises 20,000 times or however much it must to re-back the system. It always has before, even in 1979 when the price rocketed from $35 to $880 where US debt to gold holdings ratio stabilized at a very reasonable 10:1…the classic level of fractional reserve trust. If China officially owns 5,000 tonnes, and Russia 2,000, with the west also 15,000 collectively, we have 22,000 tonnes over what BusinessInsider says is $160 Trillion in assets, and you get $7.27B/tonne or $226,000/oz.

That’s a 188x increase. 1979 was a 25x increase on an awful lot less trouble, inflation, and fraud. That’s only 7x larger. Is that unreasonable? With 40 years of inflation and very little comparative rise in gold, why shouldn’t it catch up as it did in 1979? So gold will rise and we’ll have a $200,000 gold standard? That’s what will happen?

Not so fast. We COULD have a gold standard, and China, Russia and other major nations appear ready to do so if necessary, but remember we didn’t return to the gold standard last time either. Instead, we cheated and moved to a digital standard stored in ancient mainframes. Why wouldn’t we just cheat again? Back to this:

The two problems in the original chart are trust and price. The price must restore a connection between reality -real value and real production- and price; and the “reserve currency”, the medium of exchange, must be a trusted agent or method. Why would we need coins in our pockets to make that happen? For that matter, why would we need banks, who have widely proven to be the most corrupt, untrustworthy element in the whole system? We can’t go to a new system if it’s the same as the old: that’s WHY the system failed and cycles from gold to silver, silver to paper, paper to gold. We can’t go from paper to paper, that won’t work; but we also can’t so easily go to gold, asking an 800-fold increase since 2000. It would have the same disruptions Weimar had that brought Hitler, or the Jacobins had that brought Napoleon, or that Venezuela has today. And why should we? There’s no need.

The chart above has the US/Saudi oil as the critical mass of trade that allows the US$ reserve. But that isn’t necessarily true today. Today the mass of trade is in goods to and from China. But China isn’t large enough, deep enough, or trusted enough to be the new world currency. And why should they? The reserve currency is what just hollowed out and bankrupted the United States: they would just be imitating our faults. We’d also be moving from one untrusted, unbacked currency to another, and history says that doesn’t happen. So why don’t we do this:

(Courtesy Dr. Willie)

China demands not US Treasuries in NY as collateral to ship goods as presently, and not Yuan bonds, but gold bullion posted in their hot new Shanghai market, which allows physical delivery on demand. This bullion never moves as collateral, but is simply posted by one party then released on delivery. Shanghai is already larger than London, and the largest banks are already in China, which probably has the largest economy. The West and their banks are a has-been: we’re only admitting to a reality that happened years ago.

This solves our two problems: how do we know we’re returning to fair trade, like-for-like? Real goods on container ships are trading for real goods in vaults. How do we know it’s fair, mostly? You can convert the Yuan-sponsored, gold trade note to physical delivery from Shanghai, a thing which is no longer truly possible in London and NY. Will this reversion increase the gold price? Probably. How much? Every number is a state secret, but assuming the 10:1 ratio the United States showed in 1980, let’s say it’s 1:10 of our $226,000 number above or $22,600/oz. That’s reasonable, practicable, and neither stops business nor starts wars. We can do it today, and given China, Russia, Japan, Asia, Australia, and even London appear to be joining China’s AIIB front bank, I would say it already IS happening.

Which leads to one more problem. Certainly TODAY you can take gold delivery in Shanghai, but as London, NY, and the Saudis discovered, the first thing that happens once you build a system of trust is to close the doors and cheat on it. How do we know the gold is there? Even though Shanghai is a “third party” allowing delivery, who’s to say they will be tomorrow? The banks are notorious for “hypothecating”, doubling, tripling the gold on their books with accounting fraud backed by the full faith and credibility of governments, and no one’s in the mood for trusting the Chinese any more than Wells Fargo or DeutscheBank. That would drop us back to a hard gold standard, a $220,000 price, a halt to world trade, and possible world war we were trying to avoid. We need an accounting method that is better trusted and can’t be gamed. How to fix it?

The gold in Shanghai has a chain of custody, no different from “London Deliverable” standards we have today. An original audit, adjusted for receipts and deliveries is all we need. Which is where we add the blockchain. With it, Shanghai cannot double the gold on their books like Europe did in 1922 or the CME does today, marking it both received and loaned, because the blockchain only allows one position, one state at a time. Gold assayed and entered by refiner is tagged to a kilo, and you can follow that kilo bar through the system, not with double counts and vanishing, ever-changing serial numbers as the Federal Reserve and the GLD ETF showed.

Can it be cheated? All systems can be cheated, that’s the nature of men. But it makes it much harder, hard enough to establish adequate trust in banks and governments that otherwise would go to war. Will it be tied to Bitcoin? Yes, but no differently than it will be tradable to the Thai bhat or the ruble. With near-zero cost conversions, all currencies, crypto or otherwise, will be far more interchangeable and thus to some extent identical. They may even disappear, as happened when Jackson closed the 2nd central bank 182 years ago and the nation essentially moved to private currencies.

What will happen to the Dollar? It will still exist, but in some new, revised form. But the US$ today is transferring 3% of the nation’s wealth from the poor to the rich via inflation. Do we really want to keep it? And if it’s not a store of value and it’s already not the reserve currency — we just showed it’s a diluted proxy for gold and oil — why should the reformed US$ be any different? The dollar will be our national currency, still diluted and still referring to the real currency: gold, the attached Trade Note, and its crypto accounting. Until the next fraud and next crisis, perhaps in 2058.

And that’s the long story of how we leave the present debt-backed U.S. paper dollar and move to a Yuan-sponsored gold trade note that is a gold-backed cryptocurrency. In some ways we already have. Watch and see as they have the public opening of a structure planned and established years ago.

Published:8/4/2018 7:31:45 PM
[Markets] Hiroshima Revisited: Memorializing The Horrors Of War With 10 Must-See War Films

Authored by John Whitehead via The Rutherford Institute,

“The horror... the horror...”—Apocalypse Now (1979)

Nearly 73 years ago, the United States unleashed atomic bombs on the Japanese cities of Hiroshima and Nagasaki, killing more than 200,000 individuals, many of whom were civilians.

Fast forward to the present day, and the U.S. military under President Trump’s leadership is dropping a bomb every 12 minutes.

This follows on the heels of President Obama, the antiwar candidate and Nobel Peace Prize winner who waged war longer than any American president and whose targeted-drone killings continued to feed the war machine and resulted in at least 1.3 million lives lost to the U.S.-led war on terror.

America has long had a penchant for endless wars that empty our national coffers while fattening those of the military industrial complex. Since 9/11, we’ve spent more than $1.6 trillion to wage wars in Afghanistan and Iraq

When you add in our military efforts in Syria and Pakistan, as well as the lifetime price of health care for disabled veterans and interest on the national debt, that cost rises to $5.6 trillion.

Even with America’s military might spread thin, the war drums continue to sound as the Pentagon polices the rest of the world with more than 1.3 million U.S. troops being stationed at roughly 1000 military bases in over 150 countries.

To this end, Americans are fed a steady diet of pro-war propaganda that keeps them content to wave flags with patriotic fervor and less inclined to look too closely at the mounting body counts, the ruined lives, the ravaged countries, the blowback arising from ill-advised targeted-drone killings and bombing campaigns in foreign lands, or the transformation of our own homeland into a warzone.

Nowhere is this double-edged irony more apparent than during military holidays, when we get treated to a generous serving of praise and grandstanding by politicians, corporations and others with similarly self-serving motives eager to go on record as being pro-military.

Yet war is a grisly business, a horror of epic proportions. In terms of human carnage alone, war’s devastation is staggering. For example, it is estimated that approximately 231 million people died worldwide during the wars of the 20th century. This figure does not take into account the walking wounded—both physically and psychologically—who “survive” war.

War drives the American police state.

The military-industrial complex is the world’s largest employer.

War sustains our way of life while killing us at the same time. As Pulitzer Prize-winning war correspondent and author Chris Hedges observes:

War is like a poison. And just as a cancer patient must at times ingest a poison to fight off a disease, so there are times in a society when we must ingest the poison of war to survive. But what we must understand is that just as the disease can kill us, so can the poison. If we don't understand what war is, how it perverts us, how it corrupts us, how it dehumanizes us, how it ultimately invites us to our own self-annihilation, then we can become the victim of war itself.

War also entertains us with its carnage, its killing fields, its thrills and chills and bloodied battles set to music and memorialized in books, on television, in video games, and in superhero films and blockbuster Hollywood movies financed in part by the military.

War has become a centerpiece of American entertainment culture, most prevalent in war movies.

War movies deal in the extremes of human behavior. The best films address not only destruction on a vast scale but also plumb the depths of humanity’s response to the grotesque horror of war. They present human conflict in its most bizarre conditions—where men and women caught in the perilous straits of death perform feats of noble sacrifice or dig into the dark battalions of cowardice.

War films also provide viewers with a way to vicariously experience combat, but the great ones are not merely vehicles for escapism. Instead, they provide a source of inspiration, while touching upon the fundamental issues at work in wartime scenarios.

As film director Sam Fuller points out, “You can’t show war as it really is on the screen, with all the blood and gore. Perhaps it would be better if you could fire real shots over the audience’s head every night, you know, and have actual casualties in the theater.”

While there are many films to choose from, the following 10 classic war films touch on modern warfare (from the First World War onward) and run the gamut of conflicts and human emotions and center on the core issues often at work in the nasty business of war.

The Third Man (1949). Carol Reed’s The Third Man, which deals primarily with the after-effects of the ravages of war, is a great film by anyone’s standards. Set in postwar Europe, this bleak film (written by Graham Greene) sets forth the proposition that the corruption inherent in humanity means that the ranks of war are never closed. There are many fine performances in this film, including Orson Welles, Joseph Cotten and Alida Valli.

Paths of Glory (1957). This Stanley Kubrick film is an antiwar masterpiece. The setting is 1916, when two years of trench warfare have arrived at a stalemate. And while nothing of importance is occurring in the war, thousands of lives are being lost. But the masters of war pull the puppet strings, and the blood continues to flow. This film is packed with good performances, especially from Kirk Douglas and George Macready.

The Manchurian Candidate (1962). John Frankenheimer’s classic focuses on the psychological effects of war and its transmutation into mind control and political assassination. All the lines of intrigue converge to form a prophetic vision of what occurred the year after the film’s release with the assassination of John F. Kennedy. This chilling film is well written (co-written by Frankenheimer and George Axelrod) and acted. Frank Sinatra, Laurence Harvey and Angela Lansbury head a fine cast.

Dr. Strangelove, Or: How I Learned To Stop Worrying And Love The Bomb (1964). One of the great films of all time, Stanley Kubrick’s Dr. Strangelove burst onto the cinematic landscape and cast a cynical eye on the entire business of war. Strange and surreal, this film is packed full of amazing images and great performances. Peter Sellers should have walked off with the Oscar for best actor (but he didn’t). Sterling Hayden and George C. Scott are excellent in support.

The Deer Hunter (1978). Michael Cimino’s Academy Award-winning film is one of the most emotion-invoking films ever made. This story of a group of Pennsylvania steel mill workers who endure excruciating ordeals in the Vietnam War is one film that makes its point clear—war is the horror of all horrors. Superb performance by Christopher Walken, who won a best supporting actor Oscar.

Apocalypse Now (1979). I consider this Francis Ford Coppola’s best film. Based on Joseph Conrad’s novella, The Heart of Darkness, Captain Willard (Martin Sheen) treks to the Cambodian jungle to assassinate renegade, manic Colonel Kurtz (Marlon Brando). This antiwar epic is a great visual experience with fine performances from its ensemble cast.

Platoon (1986). This is not Oliver Stone’s best film, but it is one helluva war movie. Set before and during the Tet Offensive of January 1968, this is a gritty view of the Vietnam War by one who served there. Indeed, when Stone is not filling the screen with explosions, he makes the jungle seem all too real—a wet place for bugs, leeches and snakes, but not for people. Fine performances by Willem Dafoe and Tom Berenger.

Full Metal Jacket (1987). Stanley Kubrick’s take on Vietnam is one of the most powerful and psychological dramas ever made. Focusing on the schizophrenic nature of the human psyche—the duality of man—Kubrick takes us through a hell-like Parris Island boot camp and into the bowels of a surreal Vietnam through the eyes of Joker (Matthew Modine). Every facet of this film, as in all of Kubrick’s work, is top notch.

Jacob’s Ladder (1990). Adrian Lyne’s thriller hits the psyche like a thunderbolt. A man (Tim Robbins) struggles with what he saw while serving in Vietnam. Back home, he gradually becomes unable to separate "reality" from the surreal, psychotic world that intermittently intervenes in his existence. This bizarre film touches on the sordid nature of war and the corruption of those who manipulate and experiment on us while we fight on their behalf. Good cast (especially Elizabeth Peña), an excellent screenplay (Bruce Joel Rubin) and adept directing make this film one nice trip.

Jarhead (2005). Sam Mendes’ film follows a Marine recruit (Jake Gyllenhaal) through Marine boot camp to service in Operation Desert Storm, winding up at the Highway of Death. But what Mendes serves up is war as a phallic obsession in the oil-drenched sands of Kuwait and Iraq. Here soldiers fight not for causes but to survive in the nihilistic pursuit of destruction. Fine performance by Jamie Foxx as Sergeant Sykes.

As these films illustrate, war is indeed hell.

As I point out in my book A Government of Wolves: The Emerging American Police Statewhat we must decide is whether we’re stuck with the grim reality of war, or whether we’re prepared to do as Martin Luther King suggested in his Nobel Peace Prize lecture and find an alternative to war.

Speaking in Oslo in 1964, King declared:

Man’s proneness to engage in war is still a fact. But wisdom born of experience should tell us that war is obsolete. There may have been a time when war served as a negative good by preventing the spread and growth of an evil force, but the destructive power of modern weapons eliminated even the possibility that war may serve as a negative good. If we assume that life is worth living and that man has a right to survive, then we must find an alternative to war.

Published:8/3/2018 9:27:46 PM
[Markets] Paul Craig Roberts: Who Does America Really Belong To?

Authored by Paul Craig Roberts,

Not to Americans...

The housing market is now apparently turning down. Consumer incomes are limited by jobs offshoring and the ability of employers to hold down wages and salaries.  The Federal Reserve seems committed to higher interest rates - in my view to protect the exchange value of the US dollar on which Washington’s power is based.  The arrogant fools in Washington, with whom I spent a quarter century, have, with their bellicosity and sanctions, encouraged nations with independent foreign and economic policies to drop the use of the dollar.  This takes some time to accomplish, but Russia, China, Iran, and India are apparently committed to dropping  or reducing the use of the US dollar. 

A drop in the world demand for dollars can be destabilizing of the dollar’s value unless the central banks of Japan, UK, and EU continue to support the dollar’s exchange value, either by purchasing dollars with their currencies or by printing offsetting amounts of their currencies to keep the dollar’s value stable.  So far they have been willing to do both.  However, Trump’s criticisms of Europe has soured Europe against Trump, with a corresponding weakening of the willingness to cover for the US.  Japan’s colonial status vis-a-vis the US since the Second World War is being stressed by the hostility that Washington is introducing into Japan’s part of the world.  The orchestrated Washington tensions with North Korea and China do not serve Japan, and those Japanese politicians who are not heavily on the US payroll are aware that Japan is being put on the line for American, not Japanese interests.

If all this leads, as is likely, to the rise of more independence among Washington’s vassals, the vassals are likely to protect themselves from the cost of their independence by removing themselves from the dollar and payments mechanisms associated with the dollar as world currency.  This means a drop in the value of the dollar that the Federal Reserve would have to prevent by raising interest rates on dollar investments in order to keep the demand for dollars up sufficiently to protect its value.

As every realtor knows, housing prices boom when interest rates are low, because the lower the rate the higher the price of the house that the person with the mortgage can afford.  But when interest rates rise, the lower the price of the house that a buyer can afford. 

If we are going into an era of higher interest rates, home prices and sales are going to decline.

The “on the other hand” to this analysis is that if the Federal Reserve loses control of the situation and the debts associated with the current value of the US dollar become a problem that can collapse the system, the Federal Reserve is likely to pump out enough new money to preserve the debt by driving interest rates back to zero or negative. 

Would this save or revive the housing market?  Not if the debt-burdened American people have no substantial increases in their real income.  Where are these increases likely to come from? Robotics are about to take away the jobs not already lost to jobs offshoring. Indeed, despite President Trump’s emphasis on “bringing the jobs back,” Ford Motor Corp. has just announced that it is moving the production of the Ford Focus from Michigan to China.  

Apparently it never occurs to the executives running America’s offshored corporations that potential customers in America working in part time jobs stocking shelves in Walmart, Home Depot, Lowe’s, etc., will not have enough money to purchase a Ford.  Unlike Henry Ford, who had the intelligence to pay workers good wages so they could buy Fords, the executives of American companies today sacrifice their domestic market and the American economy to their short-term “performance bonuses” based on low foreign labor costs.

What is about to happen in America today is that the middle class, or rather those who were part of it as children and expected to join it, are going to be driven into manufactured “double-wide homes” or single trailers.  The MacMansions will be cut up into tenements.  Even the high-priced rentals along the Florida coast will find a drop in demand as real incomes continue to fall. The $5,000-$20,000 weekly summer rental rate along Florida’s panhandle 30A will not be sustainable.  The speculators who are in over their heads in this arena are due for a future shock.

For years I have reported on the monthly payroll jobs statistics.  The vast majority of new jobs are in lowly paid nontradable domestic services, such as waitresses and bartenders, retail clerks, and ambulatory health care services. In the payroll jobs report for June, for example, the new jobs, if they actually exist, are concentrated in these sectors: administrative and waste services, health care and social assistance, accommodation and food services, and local government.

High productivity, high value-added manufactured jobs shrink in the US as they are offshored to Asia.  High productivity, high value-added professional service jobs, such as research, design, software engineering, accounting, legal research, are being filled by offshoring or by foreigners brought into the US on work visas with the fabricated and false excuse that there are no Americans qualified for the jobs.

America is a country hollowed out by the short-term greed of the ruling class and its shills in the economics profession and in Congress.  Capitalism only works for the few. It no longer works for the many.

On national security grounds Trump should respond to Ford’s announcement of offshoring the production of Ford Focus to China by nationalizing Ford.  Michigan’s payrolls and tax base will decline and employment in China will rise. We are witnessing a major US corporation enabling China’s rise over the United States. Among the external costs of Ford’s contribution to China’s GDP is Trump’s increased US military budget to counter the rise in China’s power.

Trump should also nationalize Apple, Nike, Levi, and all the rest of the offshored US global corporations who have put the interest of a few people above the interests of the American work force and the US economy.  There is no other way to get the jobs back.  Of course, if Trump did this, he would be assassinated.  

America is ruled by a tiny percentage of people who constitute a treasonous class. These people have the money to purchase the government, the media, and the economics profession that shills for them. This greedy traitorous interest group must be dealt with or the United States of America and the entirety of its peoples are lost.

In her latest blockbuster book, Collusion, Nomi Prins documents how central banks and international monetary institutions have used the 2008 financial crisis to manipulate markets and the fiscal policies of governments to benefit the super-rich.

These manipulations are used to enable the looting of countries such as Greece and Portugal by the large German and Dutch banks and the enrichment via inflated financial asset prices of shareholders at the expense of the general population.

One would think that repeated financial crises would undermine the power of financial interests, but the facts are otherwise. As long ago as November 21, 1933, President Franklin D. Roosevelt wrote to Col. House that “the real truth of the matter is, as you and I know, that a financial element in the larger centers has owned the Government ever since the days of Andrew Jackson.”

Thomas Jefferson said that “banking institutions are more dangerous to our liberties than standing armies” and that “if the American people ever allow private banks to control the issue of their currency, first by inflation, then by deflation, the banks . . . will deprive the people of all property until their children wake-up homeless on the continent their fathers conquered.”

The shrinkage of the US middle class is evidence that Jefferson’s prediction is coming true.

Published:8/2/2018 10:49:47 PM
[Markets] Connected To The Matrix: Americans Spend Most Of Their Waking Hours Staring At A Screen

Authored by Michael Snyder via The American Dream blog,

Before televisions and computers were invented, Americans didn’t spend any time staring at television and computer screens. They worked hard, raised their families, personally interacted with their communities (remember that?), and generally tried to make the world a better place.

But now for many of us, the “virtual world” actually seems more real than the “real world” does. In fact, as you will see below, average Americans now spend most of their waking hours staring at a screen. We have willingly connected ourselves to “the matrix”, and the amount of time spent connected is rising with each passing year. A report that was just put out by Nielsen found that we spend an average of 11 hours per day interacting with media...

Americans now spend most of their waking hours watching TV, listening to music, using apps on their smartphones, or otherwise consuming media, a new study finds.

US adults are spending more than 11 hours a day on average—or about two-thirds of their waking time—consuming media in some form, Nielsen showed in its first-quarter 2018 report on US media consumption today (July 31). It measured, based on its representative panels of TV, radio, and digital households and consumers, activities like watching TV and DVDs, listening to the radio, visiting apps on a smartphone or tablet, and using the internet and game consoles.

No wonder we don’t have time to do anything else.

The time Americans spent interacting with various forms of media was up 19 minutes over the previous quarter, and here is how it broke down…

  • Watching live television: 4 hours, 10 minutes

  • Watching time-shifted television: 36 minutes

  • App/Web on a smartphone: 2 hours, 22 minutes

  • App/Web on a tablet: 47 minutes

  • Internet on a computer: 39 minutes

  • Listening to the radio: 1 hour, 46 minutes

  • Internet connected device: 26 minutes

  • Game console: 14 minutes

  • DVD/Blu-Ray device: 6 minutes

It really surprised me how little time Americans spend watching DVDs. I suppose that since everything is going digital that DVDs will someday be relics of a bygone age, but we aren’t there quite yet.

Another surprising thing from the report was the difference in behavior between the generations. According to Nielsen, older Americans actually spend the most time consuming media…

Though older generations generally spend the most time with media (adults 35-49 spend over 11 hours a day on it, while adults 50-64 do so at a nearly 13-hour clip), younger generations are at the forefront of TV-connected device and digital usage.

But young adults spend more time than anyone else consuming media on smartphones

Young adults 18-34 spend 43% of their time consuming media on digital platforms. Almost a third of their time spent with media (29%) comes from apps/web on a smartphone—the most of any measured generation.

If it seems like young people are constantly on their phones, that is because they are. Smartphone use is at an all-time high, and it keeps going up every year.

Sadly, it isn’t just in our free time that most of us are willingly connecting ourselves to “the matrix”. A different study discovered that the average office worker in America spends 1,700 hours in front of a screen each year…

We’re often told to limit the amount of screen time in our daily lives, but for many of us, we don’t have much of a choice. A new study finds the average office worker spends nearly 1,700 hours in front of a computer screen over the course of a year.

According to a survey of 2,000 office workers by contact lenses manufacturer Acuvue, office workers spend about 6.5 hours a day sitting in front of their computer.

So when you add the amount of time we spend staring at screens at work to the amount of time that we spend staring at screens at home, for many of us it pretty much takes up almost all of our waking hours.

Is this good for our society?

And we should talk about who controls all of this media that we are consuming. Today, approximately 90 percent of the programming that comes through your television is controlled by just 6 giant media corporations. Of course those 6 giant media corporations are ultimately owned by the elite of the world.

So if you spend several hours watching television each day, you are allowing “the matrix” to fundamentally shape what you think, what you believe and how you view the world.

At least on the Internet there has been more diversity of viewpoints, but now there is a massive effort to censor alternative voices. The elite are attempting to become gatekeepers in the digital world just like they are with every other form of media.

In 2018, major alternative voices are being “shadowbanned”, censored or having their accounts terminated altogether by the tech giants. Some large conservative websites have seen their traffic from social media fall by over 90 percent, and many of them have seen a dramatic drop in revenue. For example, WND has seen revenue decline by about 60 percent over the last two years…

WND and the rest of the independent media are feeling the heat from the Internet Cartel, which controls traffic, revenue, search power, hosting and distribution of news and information through social media, not to mention retail sales of all books.

It’s a scary time of rapidly shrinking traffic and revenues. WND, for instance, has seen drops in revenue from more than $10 million in 2016 to $6 million last year to perhaps as little as $4 million in 2018.

All other forms of media are already completely dominated by the elite, and so we must not allow them to take full control of the Internet.

If you want to change society, it won’t do you any good to go out to the street corners or to the marketplaces because nobody will listen to you.

If you want to change society, you have to go online, because that is where the people are.

Right now we are in an information war, and the future of our country is hanging in the balance. So let us fight this information war as hard as we can, because losing is not an option.

Published:8/2/2018 9:47:59 AM
[Markets] The Plastic Straw Ban: Enforced With Violence

Authored by Ryan McMaken via The Mises Institute,

The latest trend in banning plastic stuff is the nationwide trend toward eliminating plastic straws from restaurants. A commonly-given justification for the ban is the fact that there's a lot of plastic garbage floating around in the ocean. Of course, this rationale seems a bit odd for some locations. In Fort Collins, Colorado, for example — which is about a thousand miles from any ocean — locals feel the need to "do their part" by convincing local restaurateurs to ban the offending objects.

One can already see that this will be inconvenient for toddlers and their parents, and for the physically disabled, but with private firms choosing whether or not to use straws, it's not really an issue that requires a strong opinion.

On the other hand, when it comes to government-sponsored bans on straws, things are considerably different.

This is because at the heart of every government law, rule, and regulation is the fact that violence must ultimately be employed to enforce those laws. Indeed, Santa Barbara, California has announced a new ban on plastic straws that brings sizable punishments, if violated:

Violating Santa Barbara’s plastic straw ban could land you in jail for up to 6 months and a fine up to $1,000 per violation.

However, the City says it won’t actually punish anyone that severely if they break the rule.

And how do we know the state won't punish people accordingly? Well, we have nothing but the promise of its spokesperson. After all,

municipal code does state a violation could land the provider in jail for up to 6 months and lead to a fine up to $1,000; however, there are no plans to actually enforce that penalty. Instead, the city will do education and outreach in order to get providers to comply.

In other words, the actual statute makes it clear that any violators are subject to large fines and jail time for each infraction. That means passing out 5 straws could lead to years in prison and thousands of dollars in fines.

In the future, will judges and city prosecutors refrain from applying these penalties because some city employee said they won't back in a 2018 news story? Don't bet your livelihood on it.

The city maintains it is free to begin handing out fines and jail terms whenever it wishes. After all, if the city was committed to not using these punishments, why not write the ordinance in such a way that it's legally impossible to do so?

More likely, these rather draconian punishments will stay in the law books, and whenever it pleases the city to attack any political enemies or eccentric who hand out a few straws, then victims ought to prepare to be ruined financially, or worse.

Violence Is the Currency of Government

There's nothing new about this, of course. When a government passes new laws, it relies on its agents with guns to enforce it.

The state likes to remind people that it enforces laws against felonies like murder and assaults. That's good public relations for the state. But in reality, the state spends far more time enforcing small non-violent acts like petty drug offense, and even against small-time entrepreneurs who run afoul of regulations banning hair braiding, or car rides, or any other act committed "without a license" or without government approval.

Take, for instance, government bans on selling raw milk. Governments continue to shut down buyers and sellers of raw milk. Terms like "shut down," however, are euphemisms that hide the reality behind these closures.

When a government regulator orders a private business to cease operations, it is not making a suggestion. If the "offending" firm were to say "thanks, but no thanks" the government regulator would return with armed agents who would then make arrests and cart the "perpetrators" off to a jail cell. If they resist enough, they are likely to be shot by gun-wielding bureaucrats.

This, of course, is exactly what happened in the 2011 Federal raids on a private members-only club devoted to buying raw milk. As is so often the case with enforcement of government regulations on peaceful activities, government agents not only made arrests, but they also seized cash and other private property, in order to line the pockets of government agencies.

After the arrest came the prosecution — with draconian fines on the table. As the Atlantic noted in 2011:

the mood in the courtroom was almost comical when [club organizer James] Stewart's initial $121,000 bail was announced. "We'd been watching child molesters and wife-beaters get half that amount. James is accused of things like processing milk without pasteurization and gets such a high bail amount ... the felons in court burst out laughing."

When politicians and activists support new regulations, however, they always downplay the reality that some day, people are likely to end up in court or prison, having their lives ruined for nothing more than wanting to purchase a certain type of milk or plant, or wanting to engage in some other sort of commerce without the proper government paperwork.

Often, the people who are subject to prosecution don't even know they're in violation of any law. Most normal people don't keep up with every government regulation which governs peaceful activities. Normal people know that theft, fraud, and assault are illegal. This is built into the human experience. The illegality of everything else, though, rests primarily on the arbitrary whims of lawmakers. Who can keep track? Often, the first thing the victims of state regulation hear about their "lawbreaking" is a bureaucrat's demand for payments of sizable fines.

Supporting Government Regulation = Supporting Violence

In the end, though, support of any government law is the same as supporting the violence necessary to enforce those laws. Support of the Drug War, after all, is equivalent to locking fathers, husbands, wives, and mothers in jail for possessing certain substances. Supporting laws against raw milk is equivalent to supporting SWAT-style raids on people who sell milk, and subsequently ruining them with huge fines. Supporting laws against buying or selling certain foreign goods is the same thing as supporting imprisonment and six figure fines for the "crime" of buying and selling.

To hide this violent reality, however, interventionists have invented a wide variety of fictions. In some cases, we ought not complain because of "democracy." In other cases, we're told the "social contract" justifies it all. As Jeff Deist has noted:

Progressives hate hearing that taxation is theft, that government is force, and that every rule and regulation implies violence for noncompliance. It offends them on a visceral level, because their entire worldview hangs on the myth of social contract.

Supporters of the Santa Barbara straw ban are likely to react the same way. "Why, we'll just 'educate' people," they'll say. And if people refuse to be properly re-educated? Well, then it's off to a jail cell, of course, with the state all the while chanting the refrain of an abusive husband: "you see what you made me do?"

Published:7/31/2018 6:07:05 PM
[Entertainment] 6 great kids' picture books that celebrate summer – before it comes to an end! Picnics (which even pigs like!), building sandcastles and catching a baseball are all part of the fun in these kids' summer picture books.
Published:7/31/2018 11:05:56 AM
[Markets] Debunking The Putin Panic With Stephen Cohen


Part 1

President Trump’s warm words for Vladimir Putin and his failure to endorse U.S. intelligence community claims about alleged Russian meddling have been called “treasonous” and the cause of a “national security crisis.” There is a crisis, says Prof. Stephen F. Cohen, but one of our own making...

AARON MATE: It’s The Real News. I’m Aaron Mate.

The White House is walking back another statement from President Trump about Russia and U.S. intelligence. It began in Helsinki on Monday, when at his press conference with Vladimir Putin, Trump did not endorse the claim that Russia meddled in the 2016 election. After an outcry that played out mostly on cable news, Trump appeared to retract that view one day later. But then on Wednesday, Trump was asked if he believes Russia is now targeting the U.S. ahead of the midterms.

DONALD TRUMP: [Thank] you all very much. Appreciate it. Thank you. Thank you.

REPORTER: Is Russia still targeting the U.S. [inaudible]. No, you don’t believe that to be the case?

DONALD TRUMP: Thank you very much, everyone. We’re doing very well. We are doing very well, and we’re doing very well, probably as well as anybody has ever done with Russia. And there’s been no president ever as tough as I have been on Russia. All you have to do is look at the numbers, look at what we’ve done, look at sanctions, look at ambassadors. Not there. Look, unfortunately, at what happened in Syria recently. I think President Putin knows that better than anybody. Certainly a lot better than the media.

AARON MATE: The White House later claimed that when Trump said ‘no,’ he meant no to answering questions. But Trump’s contradiction of U.S. intelligence claims has brought the Russiagate story, one that has engulfed his presidency, to a fever pitch. Prominent U.S. figures have called Trump’s comments in Helsinki treasonous, and compared alleged Russian e-mail hacking and social media activity to 9/11 and Pearl Harbor. Those who also question intelligence claims or warmongering with Russia have been dubbed traitors, or Kremlin agents.

Speaking to MSNBC, the former U.S. ambassador to Russia Michael McFaul declared that with Trump’s comments, the U.S. is in the midst of a national security crisis.

MICHAEL MCFAUL: Republicans need to step up. They need to speak out, not just the familiar voices, because this is a national security crisis, and the president of the United States flew all the way to Finland, met with Vladimir Putin, and basically capitulated. It felt like appeasement.

AARON MATE: Well, joining me to address this so-called national security crisis is Stephen Cohen, professor emeritus at New York University and Princeton University. His books include “Failed Crusade: America and the Tragedy of Post-Soviet Russia,” and “Soviet Fates and Lost Alternatives: From Stalinism to the New Cold War.” Professor Cohen, welcome. I imagine that you might agree with the view that we are in the midst of a national security crisis when it comes to Russia, but for far different reasons than those expounded on by Ambassador McFaul.

STEPHEN COHEN: There is a national security crisis, and there is a Russian threat. And we, we ourselves here in the United States, have created both of them. This has been true for years, and now it’s reached crisis proportion. Notice what’s going on. A mainstream TV reporter shouts to President Trump, “Are the Russians still targeting our elections?” This is in the category “Are you still beating your wife?” There is no proof that the Russians have targeted or attacked our elections. But it’s become axiomatic. What kind of media is that, are the Russians still, still attacking our elections.

And what Michael McFaul, whom I’ve known for years, formerly Ambassador McFaul, purportedly a scholar and sometimes a scholar said, it is simply the kind of thing, to be as kind as I can, that I heard from the John Birch Society about President Eisenhower when he went to meet Khrushchev when I was a kid growing up in Kentucky. This is fringe discourse that never came anywhere near the mainstream before, at least after Joseph McCarthy, that the president went, committed treason, and betrayed the country. Trump may have not done the right thing at the summit, because agreements were reached. Nobody discusses the agreements. But to stage a kangaroo trial of the president of the United States in the mainstream media, and have plenty of once-dignified people come on and deliver the indictment, is without precedent in this country. And it has created a national crisis in our relations with Russia. So yes, there’s a national crisis.

AARON MATE: Let me play for you a clip from Trump’s news conference with Putin that also drew outrage back in the U.S. When he was asked about the state of U.S.-Russia relations, he said both sides had responsibility.

DONALD TRUMP: Yes, I do. I hold both countries responsible. I think that the United States has been foolish. I think we’ve all been foolish. We should have had this dialogue a long time ago. A long time, frankly, before I got to office. And I think we’re all to blame. I think that the United States now has stepped forward, along with Russia, and we’re getting together, and we have a chance to do some great things. Whether it’s nuclear proliferation, in terms of stopping, because we have to do it. Ultimately that’s probably the most important thing that we can be working on.

AARON MATE: That’s President Trump in Helsinki. Professor Cohen, I imagine that this comment probably was part of the reason why there was so much outrage, not Just of what Trump said about the claims of Russian meddling in the election. Can you talk about the significance of what he said here, and how it contradicts the, the entire consensus of the bipartisan foreign policy establishment?

STEPHEN COHEN: I did not vote for President Trump. But for that I salute him, what he just said. So far as I can remember, no wiser words or more important words have been spoken by the American president about Russia and the Soviet Union since Ronald Reagan did his great detente with Mikhail Gorbachev in the late 1980s. What Trump just did, and I don’t- we never know, Aaron, how aware he is of the ramifications of what he says. But in this case, whether he fully understood it or not, he just broke with, and the first time any major political figure in the United States has broken with the orthodoxy, ever since at least 2000. And even going back to the ’90s. That all the conflicts we’ve had with post-Soviet Russia, after communism went away in Russia, all those conflicts, which I call a new and more dangerous Cold War, are solely, completely, the fault of Putin or Putin’s Russia. That nothing in American policy since Bill Clinton in the 1990s did anything to contribute seriously to the very dangerous conflict, confrontation we have with Russia today. It was all Russia’s fault.

What that has meant, and you know this, Aaron, because you live in this world as well, it has meant no media or public dialogue about the merits of American policy toward post-Soviet Russia from Clinton, certainly through Obama. It may be changing now under President Trump. Not sure. It means if we don’t have a debate, we’re not permitted to ask, did we do something wrong, or so unwise that it led to this even more dangerous Cold War? And if the debate leads to a conclusion that we did do something unwise, and that we’re still doing it, then arises the pressure and the imperative for any new policy toward Russia. None of that has been permitted, because the orthodoxy, the dogma, the axiom, is Putin alone has solely been responsible.

So you know, you know as well as I do what is excluded. It doesn’t matter that we moved NATO to Russia’s borders, that’s not significant. Or that we bombed Serbia, Russia’s traditional ally. Or that George Bush left the Antiballistic Missile Treaty, which was the bedrock of Russian nuclear security and, I would argue, our own. Or that we did regime change by military might in Iraq and Libya, and many other things. Or that we provoked the Ukrainian crisis in 2004, and supported the coup that overthrew a legitimate, elected, constitutional president there. None of that matters. Oh, it was kind of footnotes to the real narrative. And the narrative is, is that a Russian leader Vladimir Putin in power was a horrible aggressor. Killed everybody, somehow, with secret poisons or thieves in the night who opposed him. And began this new cold or even worse war with the United States.

No historian of any merit will ever write the story that way. It’s factually, analytically, simply untrue. Now Trump has said something radically different. We got here in these dire circumstances because both sides acted unwisely, and we should have had this discussion a long time ago. So for that, two cheers for President Trump. But whether he can inspire the discussion that he may wish to, considering the fact that he’s now being indicted as a criminal for having met Putin, is a big question.

AARON MATE: So a few questions. You mentioned that some agreements were made, but details on that have been vague. So do you have any sense of what concretely came out of this summit? There was talk about cooperation on nuclear weapons, possibly renewing the New START Treaty. We know that Putin offered that to Trump when he first came into office, but Trump rejected it. There was talk about cooperating in Syria. And, well, yeah, if I can put that question to you first, and then I have a follow-up about what might be motivating Trump here. But first, what do you think concretely came out of this?

STEPHEN COHEN: Well, look, I know a lot, both as a historian, and I’ve actually participated in some about the history of American-Russian, previously Soviet, summits. Which, by the way, this is the 75th anniversary of the very first one, when Franklin Roosevelt traveled to Tehran to meet Stalin. And every president, and this is important to emphasize, every president since Roosevelt has met with the Kremlin leader. Some many times, or several times. So there’s a long tradition. And therefore there are customs. And one custom, this goes to your question, is that never, except maybe very rarely, but almost never do we learn the full extent and nature of what agreements were made. That usually comes in a week or two or three later, because there’s still the teams of both are hammering out the details.

So that’s exactly what happened at this summit. There was no conspiracy. No, you know, appeasement behind closed doors. The two leaders announced in general terms what they agreed upon. Now, the most important, and this is traditional, too, by meeting they intended to revive the diplomatic process between the United States and Russia which has been badly tattered by events including the exclusion of diplomats, and sanctions, and the rest. So to get active, vigorous diplomacy about many issues going. They may not achieve that goal, because the American media and the political mainstream is trying to stop that. Remember that anything approaching diplomatic negotiations with Russia still less detente, is now being criminalized in the United States. Criminalized. What was once an honorable tradition, the pursuit of detente, is now a capital crime, if we believe these charges against Trump.

So they tried to revive that process, and we’ll see if it’s going to be possible. I think at least behind the scenes it will be. Obviously what you mentioned, both sides now have new, more elusive, more lethal, faster, more precise nuclear weapons. We’ve been developing them for a long time in conjunction with missile defense. We’ve essentially been saying to Russia, you may have equality in nuclear weapons with us, but we have missile defense. Therefore, we could use missile defense to take out your retaliatory capacity. That is, we could stage the first strike on you and you would not be able to retaliate.

Now, everybody who’s lived through the nuclear era knows that’s an invitation to disaster. Because like it or not, we’ve lived with a doctrine called MAD, Mutual Assured Destruction, that one side dare not attack the other with a nuclear weapon because it would be destroyed as well. We were saying we now have this primacy. Putin, then, on March 1 of this year, announced that they have developed weapons that can elude missile defense. And it seems to be true. In the air and at sea, their dodgy, darty, quick thing- but they could avoid our missile defense. So where we are at now is on the cusp of a new nuclear arms race involving more dangerous nuclear weapons. And the current START, New START Treaty will expire, I think, in three or four years. But its expiration date is less important that the process of talking and negotiating and worrying officially about these new weapons had ended.

So essentially what Trump and Putin agreed is that process of concern about new and more dangerous nuclear weapons must now resume immediately. And if there’s anybody living in the United States who think that that is a bad idea they need to reconsider their life, because they may be looking into the darkness of death. So that was excellent. Briefly. What I hope they did- they didn’t announce it, but I’m pretty sure they did- that there had been very close calls between American and Russian combat forces and their proxies in Syria. We’re doing a proxy war, but there are plenty of native Russians and Americans in Syria in a relatively small combat cell. And there have been casualties. The Russians have said at the highest level the next time a Russian is killed in Syria by an American-based weapon, we will strike the American launcher. If Russia strikes our launching pads or areas, whether on land or sea, which means Americans will be there and are killed, call it war. Call it war.

So we need to agree in Syria to do more than, what do they call it, deconfliction, where we have all these warnings. It’s still too much space for mishap. And what I hope it think Trump and Putin did was to try to get a grip on this.

AARON MATE: Stephen F. Cohen, professor emeritus at at Princeton University and New York University, thank you. And stay tuned for part two. I’m Aaron Mate for The Real News.

*  *  *

Part 2


There is much to criticize the Russian president for, says Professor Stephen F. Cohen of Princeton and NYU, but many US political and media claims about Putin are false – and reckless...

AARON MATE: It’s The Real News. I’m Aaron Mate. This is part two with Stephen Cohen, professor emeritus of Russian studies at New York University and Princeton. In part one we talked about the uproar over the Trump-Putin summit, and Trump’s comments about the U.S. intelligence community and about cooperation with Russia. Now in part two we’re going to get to some of the main talking points that have been pervasive throughout corporate media, talking about the stated reasons for why pundits and politicians say they are opposed to Trump sitting down with Putin.

So let me start with Jon Meacham. He is a historian. And speaking to CNN, he worried that Trump, with his comments about NATO calling on the alliance to pay more, and calling into question, he worried about the possibility that Trump won’t come to the aid of Baltic states in the event that Russia invades.

JON MEACHAM: And what worries me most is the known unknown, as Donald Rumsfeld might put it, of what happens next. Let’s say Putin- just look at this whole week of the last five, six days in total. What happens if Putin launches military action against, say, the Baltics? What, what is it that President Trump, what about his comments that NATO suggest thar he would follow an invocation of Article 5 and actually project American force in defense of the values that not only do we have an intellectual and moral assent to, but a contractual one, a treaty one. I think that’s the great question going forward.

AARON MATE: OK. So that’s Jon Meacham speaking to CNN. So, Professor Cohen, putting aside what he said there about our intellectual values and strong tradition, just on the issue of Trump, of Putin posing a potential threat and possibly invading the Baltics, is that a realistic possibility?

STEPHEN COHEN: So, I’m not sure what you’re asking me about. The folly of NATO expansion? The fact that every president in my memory has asked the Europeans to pay more? But can we be real? Can we be real? The only country that’s attacked that region of Europe militarily since the end of the Soviet Union was the United States of America. As I recall, we bombed Serbia, a, I say this so people understand, a traditional Christian country, under Bill Clinton, bombed Serbia for about 80 days. There is no evidence that Russia has ever bombed a European country.

You tell me, Aaron. You must be a smart guy, because you got your own television show. Why would Putin want to launch a military attack and occupy the Baltics? So he has to pay the pensions there? Which he’s having a hard time already paying in Russia, and therefore has had to raise the pension age, and thereby lost 10 percentage points of popularity in two weeks? Why in the world can we, can we simply become rational people. Why in the world would Russia want to attack and occupy Latvia, Lithuania, and Estonia? The only reason I can think of is that many, many of my friends love to take their summer vacations there. And maybe some crazy person thinks that if we occupy it, vacations will be cheaper. It’s crazy. It’s beyond crazy. It’s a kind-.

AARON MATE: Professor Cohen, if you were on CNN right now I imagine that the anchor would say to you, well, okay, but one could say the same thing about Georgia in 2008. Why did Russia attack Georgia then?

STEPHEN COHEN: I’m not aware that Russia attacked Georgia. The European Commission, if you’re talking about the 2008 war, the European Commission, investigating what happened, found that Georgia, which was backed by the United States, fighting with an American-built army under the control of the, shall we say, slightly unpredictable Georgian president then, Saakashvili, that he began the war by firing on Russian enclaves. And the Kremlin, which by the way was not occupied by Putin, but by Michael McFaul and Obama’s best friend and reset partner then-president Dmitry Medvedev, did what any Kremlin leader, what any leader in any country would have had to do: it reacted. It sent troops across the border through the tunnel, and drove the Georgian forces out of what essentially were kind of Russian protectorate areas of Georgia.

So that- Russia didn’t begin that war. And it didn’t begin the one in Ukraine, either. We did that by [continents], the overthrow of the Ukrainian president in [20]14 after President Obama told Putin that he would not permit that to happen. And I think it happened within 36 hours. The Russians, like them or not, feel that they have been lied to and betrayed. They use this word, predatl’stvo, betrayal, about American policy toward Russia ever since 1991, when it wasn’t just President George Bush, all the documents have been published by the National Security Archive in Washington, all the leaders of the main Western powers promised the Soviet Union that under Gorbachev, if Gorbachev would allow a reunited Germany to be NATO, NATO would not, in the famous expression, move two inches to the east.

Now NATO is sitting on Russia’s borders from the Baltic to Ukraine. So Russians aren’t fools, and they’re good-hearted, but they become resentful. They’re worried about being attacked by the United States. In fact, you read and hear in the Russian media daily, we are under attack by the United States. And this is a lot more real and meaningful than this crap that is being put out that Russia somehow attacked us in 2016. I must have been sleeping. I didn’t see Pearl Harbor or 9/11 and 2016. This is reckless, dangerous, warmongering talk. It needs to stop. Russia has a better case for saying they’ve been attacked by us since 1991. We put our military alliance on the front door. Maybe it’s not an attack, but it looks like one, feels like one. Could be one.

AARON MATE: OK. And in a moment I want to speak to you more about Ukraine, because we’ve heard Crimea invoked a lot in the criticism of Putin of late. But first I want to actually to ask you about a domestic issue. This one is it’s widely held that Putin is responsible for the killing of journalists and opposition activists who oppose him. And on this front I want to play for you a clip of Joe Cirincione. He is the head of the Ploughshares Fund. And this is what he said this week in an appearance on Democracy Now!.

JOE CIRINCIONE: Both of these men are dangerous. Both of these men oppress basic human rights, basic freedoms. Both of them think the press are the enemy of the people. Putin goes further. He kills journalists. He has them assassinated on the streets of Moscow.

Donald Trump does not go that far yet. But I think what Putin is doing is using the president of the United States to project his rule, to increase his power, to carry out his agenda in Syria, with Europe, et cetera, and that Trump is acquiescing to that for reasons that are not yet clear.

AARON MATE: That’s Joe Cirincione.

STEPHEN COHEN: I know him well. It’s worse than that. It’s worse than that.

AARON MATE: Well Yes. There’s two issues here, Professor Cohen. One is the state of the crackdown on press freedoms in Russia, which I’m sure you would say is very much alive, and is a strong part of the Russian system. But let’s first address this widely-held view that Putin is responsible for killing journalists who are critical of him.

STEPHEN COHEN: I know I’m supposed to follow your lead, but I think you’re skipping over a major point. How is it that Joe, who was once one of our most eminent and influential, eloquent opponents of nuclear arms race, who was prepared to have the president of the United States negotiate with every Soviet communist leader, including those who had a lot of blood on their hands, now decide that Putin kills everybody and he’s not a worthy partner? What happened to Joe?

I’ll tell you what happened to him. Trump. Trump has driven once-sensible people completely crazy. Moreover, Joe knows absolutely nothing about internal Russian politics, and he ought to follow my rule. When I don’t know something about something, I say I don’t know. But what he just said is ludicrous. And the sad part is-.

AARON MATE: But it’s widely held. If it’s ludicrous-. But widely held, yeah.

STEPHEN COHEN: Well, the point is that once distinguished and important spokespeople for rightful causes, like ending a nuclear arms race, have been degraded, or degraded themselves by saying things like he said to the point that they’re of utility today only to the proponents of a new nuclear arms race. And he’s not alone. Somebody called it Trump derangement syndrome. I’m not a psychiatrist, but it’s a widespread mania across our land. And when good people succumb to it, we are all endangered.

AARON MATE: But many people would be surprised to hear that, because again, the stories that we get, and there are human rights reports, and it’s just sort of taken as a given fact that Putin is responsible for killing journalists. So if that’s ludicrous, if you can explain why you think that is.

STEPHEN COHEN: Well, I got this big problem which seems to afflict very few people in public life anymore. I live by facts. I’m like my doctor, who told me not long ago I had to have minor surgery for a problem I didn’t even know I had. And I said, I’m not going to do it. Show me the facts. And he did. I had the minor surgery. Journalists no longer seem to care about facts. They repeat tabloid rumors. Putin kills everybody.

All I can tell you is this. I have never seen any evidence whatsoever, and I’ve been- I knew some of the people who were killed. Anna Politkovskaya, the famous journalist for Novaya Gazeta was the first, I think, who was- Putin was accused of killing. I knew her well. She was right here, in this apartment. Look behind me, right here. She was here with my wife, Katrina vanden Huevel. I wouldn’t say we were close friends, but we were associates in Moscow, and we were social friends. And I mourn her assassination today. But I will tell you this, that neither her editors at that newspaper, nor her family, her surviving sons, think Putin had anything to do with the killing. No evidence has ever been presented. Only media kangaroo courts that Putin was involved in these high-profile assassinations, two of the most famous being this guy Litvinenko by polonium in London, about the time Anna was killed, and more recently Boris Netsov, whom, it’s always said, was walking within view of the Kremlin when he was shot. Well, you could see the Kremlin from miles away. I don’t know what within the view- unless they think Putin was, you know, watching it through binoculars. There is no evidence that Putin ever ordered the killing of anybody outside his capacity as commander in chief. No evidence.

Now, did he? But we live, Aaron, and I hope the folks who watch us remember this. Every professional person, every decent person lives or malpractices based on verified facts. You go down the wrong way on a one-way street, you might get killed. You take some medication that’s not prescribed for you, you might die. You pursue foreign policies based on fiction, you’re likely to get in war. And all these journalists, from the New York Times to the Washington Post, from MSNBC to CNN who churn out daily these allegations that Putin kills people are disgracing themselves. I will give you one fact. Wait. One fact, and you could look it up, as Casey Stengel used to say. He was a baseball manager, in case you don’t know.

There’s an organization called the Committee to Protect American Journalists. It’s kind of iconic. It does good things, it says unwise things. Go on its website and look at the number of Russian journalists killed since 1991, since the end of the Soviet Union, under two leaders. Boris Yeltsin, whom we dearly loved and still mourn, and Putin, whom we hate. Last time I looked, the numbers may have changed, more were killed under Yeltsin than under Putin. Did Putin kill those in the 1990s?

So you should ask me, why did they die, then? And I can tell you the main reason. Corrupt business. Mafia-like business in Russia. Just like happened in the United States during our primitive accumulation days. Profit seekers killed rivals. Killed them dead in the streets. Killed them as demonstrations, as demonstrative acts. The only thing you could say about Putin is that he might have created an atmosphere that abets that sort of thing. To which I would say, maybe, but originally it was created with the oligarchical class under Boris Yeltsin, who remains for us the most beloved Russian leader in history. So that’s the long and the short of it. Go look at the listing on the Committee to Protect Journalists.

AARON MATE: OK. So, following up on that, to what extent- and this gets a bit into history, which you’ve covered extensively in your writings. To what extent are we here in the West responsible for the creation of that Russian oligarchal class that you mentioned? But also, what is Putin’s relationship to it now, today? Does he abet it? Is he entrenched in it? We hear, often, talk of Putin possibly being the richest person in the world as a result of his entanglement with the very corruption of Russia you’re speaking about. So both our role in creating that problem in Russia, but then also Putin’s role now in terms of his relationship to it.

STEPHEN COHEN: I’m going to give you a quick, truncated, scholarly, historical perspective on this. But this is what people should begin with when they think about Vladimir Putin and his 18 years in power. Putin came to power almost accidentally in 2000. He inherited a country whose state had collapsed twice in the 20th century. You’ve got to think about that. How many states have collapsed that you know of once? But the Russian state, Russian statehood, had collapsed once in 1917 during the revolution, and again in 1991 when the Soviet Union ended. The country was in ruination; 75 percent of the people were in poverty.

Putin said- and this obsesses him. If you want to know what obsesses Putin, it’s the word ‘sovereignty.’ Russia lost its sovereignty- political, foreign policy, security, financial- in the 1990s. Putin saw his mission, as I read him, and I try to read him as a biographer. He says a lot, to regain Russia’s sovereignty, which meant to make the country whole again at home, to rescue its people, and to protect its defenses. That’s been his mission. Has it been more than that? Maybe. But everything he’s done, as I see it, has followed that concept of his role in history. And he’s done pretty well.

Now, I can give you all Putin’s minuses very easily. I would not care for him to be my president. But let me tell you one other thing that’s important. You evaluate nations within their own history, not within ours. If you asked me if Putin is a democrat, and I will answer you two ways. He thinks he has. And compared to what? Compared to the leader of Egypt? Yeah, he is a democrat. Compared to the rulers of our pals in the Gulf states, he is a democrat. Compared to Bill Clinton? No, he’s not a Democrat. I mean, Russia-. Countries are on their own historical clock. And you have to judge Putin in terms of his predecessors. So people think Putin is a horrible leader. Did you prefer Brezhnev? Did you prefer Stalin? Did you prefer Andropov? Compared to what? Please tell me, compared to what.

And by the way, that’s how that’s how Russians-. You want to know why he’s so popular in Russia? Because Russians judge him in the context of their own what they call zhivaya istoriya, living history; what we call autobiography. In terms of their own lives, he looks pretty darn good. They complain out him. We sit in the kitchen and they bitch about Putin all the time. But they don’t want him to go away.

AARON MATE: All right. Well, on that front, we’re going to wrap this up there. Stephen Cohen, professor emeritus of Russian studies at New York University and Princeton. His books include “Failed Crusade: America and the Tragedy of Post-Soviet Russia,” and “Soviet Fates and Lost Alternatives: From Stalinism to the New Cold War.” Professor Cohen, thank you.

STEPHEN COHEN: You forgot one book.

AARON MATE: I did not say I was reading your, your complete bibliography.

STEPHEN COHEN: It’s called-. It’s called “Confessions of a Holy Fool.”

AARON MATE: Is that true? Or are you making a joke.

STEPHEN COHEN: Somewhere in between. [Thank you, Aaron.]

AARON MATE: Professor Cohen, thank you. And thank you for joining us on The Real News.

Published:7/30/2018 11:04:03 PM
[World] BOOK REVIEW: 'The Judge Hunter' by Christopher Hunter


By Christopher Buckley

Simon & Schuster, $26.95, 345 pages

With 16 books and one play to his credit, Christopher Buckley no longer needs to be identified as "the son of William F. Buckley Jr.," although he has every reason to be proud of the connection.

Writing novels ... Published:7/30/2018 8:17:03 PM

[Markets] Millennial Socialism: Stupid, Evil, Or Both?

Authored by Kurt Schlichter via,

Congratulations, oh most insufferable of generations – against all odds and confounding the experts, you have still somehow managed to make yourselves even more annoying. Apparently, the hep new jive among your tiresome cohort is “Democratic Socialism,” resurrecting a poisonous nineteenth-century political death cult and putting a kicky new spin on it to make it palatable for the suckers. It’s the political equivalent of hipsters who insist vinyl records are superior because they didn’t grow up forced to crank their tunes on that miserable format.

The “Democratic” part is some cunning rebranding. Just stick “Democratic” in front of something awful and it’s good-to-go. “Democratic haggis”? Yummy! “Democratic herpes”? Sexy! “Democratic Nazism?” Hey, what’s the difference? National socialism, democratic socialism? It’s really just a question of who runs the camps because regardless of the particular brand of socialism, there are always camps.


That these millennial Marxoids lack personal experience with socialism does not stop them from embracing it. After all, socialism’s biggest fans are always the people who aren’t trapped inside it. Remember the progs who always fly down to Havana and/or Caracas to party with the local caudillo? They always fly home again.

Today's millennial socialist dilettantes might consider consulting with some of us who have personal experience with this ideological cancer, but millennials tend to prefer to rely upon their arbitrary feelz rather than on boring old facts, evidence, and history.

What the boring old facts, evidence, and history demonstrate, beyond any rational dispute, is that socialism is a bloodstained abomination with north of 100 million corpses to its accursed credit. The It Girl of the current commie/Democrat daisy chain, wide-eyed half-wit Alexandra Ocasio-Cortez, doesn’t let bourgeois concepts like “knowing things” stop her from sharing her sophomore-grade insights all over the left-wing media, which is to say “the media.” Gulag Barbie is a clown, and even the late nite hack hosts stare back at her adolescent babbling, amazed as she tosses an incoherent word salad about her workers’ paradise.

Why, it will be just like Switzerland. Or Sweden. One of those. Like, are they different?

By the way, that’s satire (Def: “trenchant wit, irony, or sarcasm used to expose and discredit vice or folly”) in case you are, like her, too dumb to tell.

No one loves socialism quite like a moron who has never experienced it firsthand. No one hates it like someone who has seen it up close. I walked around in its ruins overseas; it’s an abattoir. My wife escaped it, though her granddad didn’t – he rotted in Castro’s prisons for nearly two decades because he refused to play ball with the reds. Then he died. Oh well, gotta break a few eggs to create a paradise where somebody else pays for your college, right?

Just remember that you are an egg.

The free stuff thing is a really big part of what today’s “Democratic Socialism” is –getting the leftist government to send people with guns to take the stuff you’ve worked for and give it to the people who like socialism.

Free college? Well, free for the people who vote for the democratic socialists.

Free healthcare? Well, free for the people who vote for the democratic socialists.

Free whatever they decide they want for free next? Well, free for…you get the idea.

Three guesses as to who gets stuck with the check for all this free stuff, because someone always gets stuck with the check because there is no such thing as free stuff. All those millennial mommies who read their theybies that insufferably stupid kiddie book The Giving Tree implanted the dual notions of entitlement and economic illiteracy into their useless spawn. The promise of socialism is that someone else will do the toiling – and that someone is always the people who reject socialism.

You guessed right! It's normal Americans once again, the draft horses of America, who will be expected to carry their own weight as well as the weight of all the cool kidz in Brooklyn and ‘Frisco. But as my upcoming book Militant Normals: How Regular Americans Are Rebelling Against the Elite to Reclaim Our Democracy demonstrates in vicious and hilarious detail, Normals are getting tired of snobs who disrespect and despise them while simultaneously expecting them to maintain, feed, fuel, and defend this country all by themselves.

The socialist cheerleaders don’t want to be normal. Normality requires work. They want to be part of an elite that will run things from their progressive urban coastal enclaves, and in socialism there's always a lot of running things going on. But they always assume that once the revolution comes, they will be the ones running things, clothed in government authority and making all the economic decisions that individuals and their companies make today. None of them imagine they will be the ones stuck with the dirty jobs – they dream of being commissars, not garbagemen.

SJWism is perfect training for the aspiring cog in the totalitarian oppression machine – policing campuses for forbidden thought teaches them the skills they can put into action policing society for forbidden thought. I wrote about what these wannabe Bolsheviks will do if they aren’t stopped in my novels People’s Republic and Indian Country, which depict both the nightmarish world they seek to create and the proper response to tyranny by American patriots.

Spoiler: All Normal American citizens should take advantage of their First and Second Amendment rights to act to prevent leftist tyranny – at least, until some majority of leftist judges decides that the rights of free speech, a free press, and to keep and bear arms don’t actually exist just because they are there in the text, but the right to force others to give you free stuff and to “pronoun justice” do exist because of penumbras and emanations and reasons.

Now, democratic socialists will always deny that getting on the pathway to tyranny will lead to tyranny, and they will always tell you that true socialism has never been achieved. Basically, their argument is that we should throw out the ideology that brought the world the freest and most prosperous country in human history and instead give an ideology that has failed every single time it's been attempted yet another shot because they are tired of paying for the things they want.

This is not a compelling argument for Normals, who have enough life experience to realize that things that fail every single time they are tried are certain to fail again.

Socialism’s perfect record of failure, misery, and slaughter is kind of a problem for them, so they pivot and distract, playing an ideological shell game by claiming that what they really want isn’t socialism. Why, they just to be more like Canada! This, of course, begs the question of why they call themselves “socialists” if they don't want socialism.

But Normals are woke; they prefer their freedom and abundant toilet paper. They know that the current socialist fad is a lie, because socialism is built on lies. The democratic socialists keep promising Denmark and Norway, and but they always deliver Cuba and Venezuela.

Published:7/30/2018 8:17:02 PM
[Politics] Muslim Congressman tells Amazon to Stop Selling Books that Liberals Don’t Like

Democrat Congressman and Muslim Brotherhood-linked Keith Ellison took an oath to uphold the Constitution of the United States. It’s rare that you can find a member of Congress that abides by that oath, but Ellison has taken his disloyalty to his oath to a new level. Ellison, who is “the deputy chair of the Democratic National Committee, wrote ...

The post Muslim Congressman tells Amazon to Stop Selling Books that Liberals Don’t Like appeared first on Godfather Politics.

Published:7/29/2018 11:40:39 PM
[Politics] Muslim Congressman tells Amazon to Stop Selling Books that Liberals Don’t Like

Democrat Congressman and Muslim Brotherhood-linked Keith Ellison took an oath to uphold the Constitution of the United States. It’s rare that you can find a member of Congress that abides by that oath, but Ellison has taken his disloyalty to his oath to a new level. Ellison, who is “the deputy chair of the Democratic National Committee, wrote ...

The post Muslim Congressman tells Amazon to Stop Selling Books that Liberals Don’t Like appeared first on Godfather Politics.

Published:7/29/2018 11:40:39 PM
[Markets] Why The Most Important Trade Of The Past Decade Is Now Reversing

Nomura's head of cross-asset strategy Charlie McElligott writes today that he is seeing heightened equity fund manager consternation right now, as there are indications of potential catalysts on the horizon for a reversal of what has been the most important trade of the past 11 years - “growth over value” - with the recent breakdowns in FB, NFLX, TWTR further contributing.

Why are they concerned? Because consensual “long growth, short value” positioning has dictated performance over the past few years, and with it, this portfolio construct became “momentum” as well.

Two catalysts going-forward which could escalate this: 

  • escalation of Chinese stimulus / easing impacting creating a potential commodities / cyclicals ‘melt-up’, and/or,
  • steepening of yield curve, as tighter financial conditions begin to drag the real economy and ultimately force the market to remove Fed hikes currently priced-into the front-end.

McElligott details these below:


On the surface, this is equities-centric message…but the truth is that the subject matter that is the “Growth over Value” stock phenomenon since 2007 has major macro inputs, and significant read-throughs for both broad risk-asset sentiment and larger regime- / rotation- / performance- implications.

Yesterday in maximum “un-shocking” fashion, the Facebook blowup and its implications on crowded “Growth” factor trades (alongside the NXPI / QCOM deal “nuking” to a lesser-extent) caused meaningful performance ripples across equities books, and largely wiped-out all of the outsized gains from Wednesday’s U.S. / E.U.“Art of the Deal Truce” extravaganza.  Luckily for the masses, after the close we saw another “growth” poster –child—AMZN—ride to the rescue.

First, a bit more granularity on why one stock (FB) could matter so much: FB is also in some 200 different indices (!), ranging from “Growth”- / Tech- / FAANG- related ones (Tech is, after all, a 41% weighting in the S&P 500 Growth Index)…to somehow, “Low Volatility-,” “Low Beta-” and even “Value-” indices as well.  PASSIVE AT ITS VERY WORST, the definition of “crowding” as it’s simply “everywhere” and thus has such an outsized impact (it also had 91% of analysts at a “Buy / Outperform” rating going into the EPS print). 

For the quants, FB is in our ‘Sales Growth’ factor (long leg), the top performing “Growth” category YTD—as well as our ‘5Y EPS Growth’ factor long leg, ‘Operating Leverage’ factor long leg, our ‘Analyst Coverage’ factor long leg and the ‘Cash / Assets’ factor long leg…with the majority of these factors at the top of the past year’s factor category performance table. 

Bottom-line, FB is / was the most widely held overall Hedge Fund stock, as well as the most frequent top 10 HF holding, per competitor PB data.

But why is “everybody” parked in “growth” in the first-place? 

Well, these are stocks which throughout the post-GFC recovery period of “slow-flation,” with “lower rates / flatter curves forever,” benefited due to the ability to grow earnings without requiring a “geared” economy—thus, “seculars over cyclicals.” 

Even during the U.S. “economic escape velocity” story of 2017 / 2018—where late-cycle expansion met with dual fiscal stimulus drove actual “above tend” U.S. growth and inflation for the first time in “eons” and which then should have seemingly driven outperformance from “cyclical growth” sectors / names—“secular growth” continued to work, due to what I’d consider as widespread skepticism as to the “stickiness” of said “growth” and “inflation.” 

Essentially, investors were only “renting” the “cyclicals” during this economic “melt-up,” but have remained deeply committed to these “growth” companies in the long books, which continue to crush earnings, driving higher “Cash / Assets” levels (the best-performing Nomura factor since the bottom of UST yields in July ’16 which has then been “loaded” even further) and thus, these stocks “only go higher.”

This “only go higher” dynamic then speaks to another favorite subject: “momentum.”  As performance-anxiety-laden active equities portfolio managers have “gotten the joke” on the “long growth, short value” construction driving returns and preserving careers over the past few years, part of the issue then is that this “long growth, short value” positioning has effectively become pure “momentum.” 

This only further concentrates as “Tech” and “Consumer Discretionary” (think FANG+) sectors by themselves make up a collective 44% of our “Sales Growth” longs basket and 47% of our “5Y EPS Growth” longs basket.  So then should it be any surprise that these same two “growth” sectors then make up 51%  of our “1Y Momentum” longs basket?

So as we began seeing signs of weakness in some of these “market generals” this earnings season, it comes at a critical juncture in a risk-asset world that is looking to get more optimistic again against the “Trade War” backdrop.  Thursday’s “nervy” US Equities trade and the recent performance fade / “chop” for much of the Equities Long-Short world speaks to this frustration and concern about the potential for a reversal in this multi-year story…ESPECIALLY after this week’s “agitation” with multiple days of outsized (and under-owned) “Value” outperformance performance relative to (crowded) “Growth.”

So this is the question: “what will it take for “Value” to work again / reverse the trend since 2007 vs “Growth?”—an outright existential one for an entire style of investing which, historically, has generated superior returns vs Growth historically (per the work of Fama and French).

Since 2007 we’ve seen a complete breakdown of “V vs G,” which not surprisingly is when the Fed began “panic-easing” as the cracks in the housing market began to bleed into credit / funding markets. Perpetually “easy” financial conditions (lower yields and flatter curves) are a massive input here with the underperformance of “Value” vs “Growth.”

So what could cause this reversal to finally occur and drive an actually rotation into “cheap” and out of “expensive” within Equities?


An enormous potential input here is China.  Let’s get right down to it: China has “blinked,” reversing a multi-year deleveraging campaign into what is now a double-barreled (both monetary- and fiscal-) easing / stimulus policy, in order to avoid the hard truths of a domestic growth slowdown, tightening credit markets and overall financial system stability risk.  Months of “easing around the edges” (as I have put it previously) has escalated over the past two weeks, while this week’s State Council meeting crystalized the “shift” by avoiding any mention whatsoever of “deleveraging.”

The cross-asset implications are potentially enormous, as the “consumption power” within Chinese fiscal stimulus / infrastructure fixed-asset investment growth projects has previously shown the ability to single-handedly reset the Commodities complex “higher”—and with it, global inflation expectations (as critical price-drivers in long-term macro factor regimes throughout fixed income, equities and currencies).  This matters to “Value” because again, it’s the “cyclically-geared” stuff which has lagged the “secular growth” stuff since the crisis.  If China can “reflate the world” those “cyclicals” are gonna get hot again.  
Long-time readers know I have always respected the power of Chinese “credit- and / or liquidity- pumping” to impact global markets.  Take a look at these charts on the relationship between PBoC open-market operations and various global assets--


PBoC liquidity operations have been an integral “signal” previously in my making market calls into “inflation-sensitive” assets like Industrial Metals (Iron Ore below), as the relationship is quite clear--


So to the point, one can then see PBoC liquidity injections as a directional indicator or even outright catalyst for U.S. equities rotations “into Value, out of Growth” (as the decade post the GFC has largely seen global “Cyclicals” “left-behind” in favor of “Secular Growers”)



This is why we’ve continued to push UST 2s10s / 5s30s “curve caps” trades with anywhere from 1y to 3y expiry, as this “late-cycle” economy into rapidly-tightening financial conditions (ESPECIALLY WITH USD STRENGTH NOW AS TAILWIND) inevitably means that growth downside vs upside is skewed from here out. It’s the perfect hedge.

The same flattening impetus in the market (beyond the pension fund de-risking and tax reform catalysts) of “above-trend growth and inflation” which forced a skeptical market to “come to terms” with the Fed’s dots and consistently add hikes to the front-end for the last year—will have to be reversed out, as “slowing” will see hikes removed when markets “sniff” the slowdown.  Hikes removed from front-end means those yields readjust lower VIOLENTLY, in light of the scale of the short there.

And when curves move from flattening to steepening, it’s the “tell” that the “gig is up.” 

Remember that Friday / Monday curve steepening (via the BoJ) alongside the Chinese stimulus escalation start of week?  THAT was why we saw that lumpy “quant factor reversal” that I wrote about Tuesday night (“THE QUIETEST EQUITIES FACTOR ROTATION YOU’LL EVER SEE”).

That COULD be a look at the future state in a year’s-time. 



Published:7/27/2018 10:38:30 AM
[Markets] A Brief History Of US Covert Action In Syria - Part 3

In part 3 of this corrective history of the Syrian proxy war, we chart ISIS' rapid advance into central Syria and inroads into the Damascus suburbs, as well as Russian intervention and the resulting failure of US regime change plans. See Part 1 here and Part 2 here.

Part 3: The Myth of US 'Inaction' in Syria, by William Van Wagenen via The Libertarian Institute

On May 20, 2015 ISIS conquered the city of Tadmur at the site of ancient Palmyra, famous for its Roman ruins, and which lies in Homs province on the road between Deir Ezzour and Damascus. CNN reported of the ISIS assault to take Palmyra that “After at least 100 Syrian soldiers died in fighting overnight, Syrian warplanes carried out airstrikes Thursday in and around Palmyra.”

Shortly after capturing the city, ISIS released video of its fighters throwing two allegedly gay men from the top of a building, and then stoning them. CBS News cited an eyewitness as claiming that "ISIS militants blared on loudspeakers for men to gather".

Then a black van pulled up outside the Wael Hotel, and Mallah and Salamah were brought out. The first to be thrown off was Mallah. He was tied to a chair so he couldn’t resist, then pushed over the side. He landed on his back, broken but still moving. A fighter shot him in the head. Next was Salameh. He landed on his head and died immediately. Still, fighters stoned his body, Omar said. The bodies were then hung up in Palmyra’s Freedom Square for two days, each with a placard on his chest: ‘He received the punishment for practicing the crime of Lot’s people.’”

ISIS also released video of teenage boys carrying out the mass execution of 25 captured Syrian soldiers in the city’s ancient amphitheater. Agence France Presse (AFP) reported that ISIS executed as many as 200 people after taking the city. ISIS militants also murdered Khalid al-Asaad, the 83 year old retired director of antiquities for Palmyra. The New York Timesreports that “After detaining him for weeks, the jihadists dragged him on Tuesday to a public square where a masked swordsman cut off his head in front of a crowd, Mr. Asaad’s relatives said. His blood-soaked body was then suspended with red twine by its wrists from a traffic light, his head resting on the ground between his feet, his glasses still on, according to a photo distributed on social media by Islamic State supporters.”

CNN commented that despite these atrocities, “there’s no indication that Syrian ground forces will try to take back the city, 150 miles northeast of Damascus, the capital. Nor that any other countries such as the United States will come to the rescue. ‘The world does not care about us,’ the Palmyra resident said. ‘All they are interested in is the stones of ancient Palmyra.’”

US refused to stop ISIS advance on Palmyra

US planners could have indeed bombed convoys of ISIS fighters moving across the open desert from Raqqa to assault Palmyra, but chose not to. The LA Times reported of this period that “as Islamic State [ISIS] closed in on Palmyra, the U.S.-led aerial coalition that has been pummeling Islamic State in Syria for the past 18 months took no action to prevent the extremists’ advance toward the historic town — which, until then, had remained in the hands of the sorely overstretched Syrian security forces.

The U.S. approach in Palmyra contrasted dramatically with the very proactive U.S. bombardment of Kobani during 2014-15 on behalf of U.S.-allied Kurdish militias fending off a furious Islamic State offensive [Emphasis mine].” US planners were willing to come to the aid of their Kurdish allies in northeastern Syria against ISIS, but refused to do the same for residents in Palmyra, as the city had been under Syrian government control.

One year later, in March 2016, Russian and Syrian forces were able to retake Palmyra and liberate it from ISIS, to the displeasure of US planners. The LA Times noted that White House officials have “difficulty publicly lauding advances against Islamic State by Assad and his allies, including the Russians and Iranians, after years of calling for Assad’s fall” and that the Russian success in combating ISIS created a “dilemma” for US planners, because “Washington has endeavored to portray the battle against Islamic State as a project of the United States and its allies, while accusing Moscow of attacking ‘moderate’ rebels instead of the extremists. Palmyra seems to embody an alternative narrative.” US dissatisfaction at the defeat of ISIS in Palmyra was also expressed by State Department spokesperson Mark Toner at a press briefing in March 2016, when Toner refused “to laud” the Syrian and Russian effort to liberate the city.

The fall of Palmyra in May 2015 resulted in ISIS control of some 50% of Syrian territory, and constituted “another strategic defeat that could expose Homs and Damascus to the terror group’s advances,” according to the GuardianAl-Jazeeraacknowledged the same, explaining that the “fall of the city potentially opens the way for ISIL [ISIS] to advance towards key government-held areas, including the capital and Homs.”

Terror Insurgency Gains Momentum

After capturing Palmyra, ISIS militants attempted multiple times to assault the nearby T4 airbase, located 40 km west to the west of the ancient city in Homs province. Crowd-sourced journalism site Bellingcat reported that “The Islamic State’s [ISIS] offensive in Central Syria has not only allowed the fighters of the Islamic State [ISIS] to expand their operations into areas previously out of reach, but it now also threatens the regime’s gas supplies, its presence on numerous fronts, its control over the only road leading to the vitally important T4 airbase and the airbase itself, the largest of its kind in Syria.”

On August 6, 2015 ISIS advanced further toward the Damascus by capturing the town of al-Qaryatain, which lays roughly half way between Palmyra and the Syrian capital. United Press International (UPI) reports that “37 pro-government forces were killed, as were 23 IS militants.

The battle began with suicide bombings at checkpoints of the town of about 40,000; the population of the community, a mix of Sunni Muslims and Christians, has been reduced by the flight of refugees. The capture of al-Qaryatain indicates IS [ISIS] can move troops and supplies across central Syria without interference, from Palmyra in the east and southwestward to al-Qaryatain.” CNN cited SOHR as reporting that “The Islamic extremists [ISIS] have abducted more than 200 people, said Rami Abdurrahman, the observatory’s executive director. Up to 500 people are unaccounted for, but Abdurrahman said the observatory has confirmed that at least 230 people have been taken hostage.

He said that ISIS militants targeted Christians, some of whom were abducted from the town’s Dar Alyan monastery, as well as people believed to have alliances with the Syrian regime.” To be considered a collaborator or as having “alliances with the regime” by ISIS, it was often enough to simply have a picture of Bashar al-Assad on one’s phone, despite the fact that “lots of people have a picture of Bashar on the phone because it helps them get through checkpoints,” according to one former ISIS captive. ISIS militants then bulldozed the 1,500 year old monastery and its church, while the senior priest, Father Jacques Mouraud, was among the kidnapped.

The capture of Qaraytain also allowed ISIS forces to threaten to take control of the strategic M5 highway on month later.

Patrick Cockburn of the Independent reported in September 2015 that “Islamic State (Isis) forces in Syria are threatening to capture a crucial road, the loss of which could touch off a panic and the exodus of several million refugees from government areas, in addition to the four million who have already fled. Isis fighters have advanced recently to within 22 miles of the M5 highway, the only major route connecting government-held territory in Damascus to the north and west of the country. . . The four million Syrians who are already refugees mostly came from opposition or contested areas that have been systematically bombarded by government aircraft and artillery, making them uninhabitable. But the majority of the 17 million Syrians still in the country live in government-controlled areas now threatened by Isis. These people are terrified of Isis occupying their cities, towns and villages because of its reputation for mass executions, ritual mutilation and rape against those not obedient to its extreme variant of Sunni Islam. Half the Syrian population has already been displaced inside or outside the country, so accurate figures are hard to estimate, but among those particularly at risk are the Alawites (2.6 million), the Shia heterodox sect that has provided the ruling elite of Syria since the 1960s, the Christians (two million), the Syrian Kurds (2.2 million), and Druze (650,000) in addition to millions of Sunni Arabs associated with the Syrian government and its army [emphasis mine].”

ISIS inroads to Damascus

By April 2015, ISIS and Nusra had also captured the Yarmouk Palestinian refugee camp, known as the capital of the Palestinian diaspora, in the southern suburbs of Damascus, and just kilometers from the presidential palace. This allowed ISIS and Nusra to control territory that could be used as a base to assault the heart of the Syrian capital itself.

Flush with newly delivered weapons supplied by the CIA and its Saudi partners, rebels from the FSA and Nusra had invaded and occupied Yarmouk camp two and a half years previously, on December 15, 2012. Rebels entered the camp against the will of Yarmouk’s resident’s, despite explicit requests from the PLO that the rebels not invade, as Palestinians wished to remain neutral in the conflict.

Some 800,000 Yarmouk residents, both Palestinian and Syrian, fled the camp to escape the dangers of the subsequent fighting. Residents, fearing both the rebel mortars and Syrian government MiG airstrikes, sought refuge in other Damascus neighborhoods, in the Palestinian camps in Lebanon, in Turkey, and even in Europe, with the scale of the displacement numerically rivaling that of the 1948 Nakba.

Rebels soon began looting homes, taking over hospitals and stealing medicine. The Syrian government imposed a siege on Yarmouk, which prevented the rebels from advancing further toward Damascus, but which made food, water, and basic necessities scarce, forcing residents to depend heavily on intermittent UNRWA humanitarian aid deliveries. Government and rebel use of heavy artillery and mortars while fighting one another led to significant destruction in the camp, and scores of civilian deaths.

The few remaining civilians, roughly 20,000, became trapped in the camp because, as one Yarmouk resident told the Guardian, “rebel groups were eager to keep people in the camp, she said, particularly men and boys. Their departure was seen as defection from the opposition cause as well as potentially making it easier for government troops to enter the camp by force and regain control.” While the Syrian government encouraged civilians to leave, many nonetheless feared being detained by the Syrian security forces which were screening exiting civilians for fighters. The rebel occupation and government siege continued for years, causing hundreds of deaths due to starvation and lack of medical care.

In April 2015, Nusra fighters facilitated the entry of ISIS fighters into Yarmouk. The BBC reported that “Monitors say IS [ISIS] and the al-Qaeda-affiliated al-Nusra Front, who have fought each other in other parts of Syria, are working together in Yarmouk.”

Several thousand residents who managed to escape the camp and take shelter in a school in an area under Syrian army control told of ISIS atrocities, including one boy who saw ISIS fighters using a severed head as a soccer ball, and a woman who described how “’Daesh’s [ISIS] arrival meant destruction and massacre. Their behavior’s not human and their religion is not ours.”

Clashes between ISIS and local Palestinian rebels (who were loyal to Hamas and had previously supported Nusra’s initial invasion of the camp) exacerbated the humanitarian situation, forcing UNRWA to cease the already limited aid deliveries to Yarmouk. The Guardian quoted one Yarmouk resident as stating, “There is no food or electricity or water, Daesh [ISIS] is killing and looting the camp, there are clashes, there is shelling. Everyone is shelling the camp. . . As soon as Daesh entered the camp they burned the Palestinian flag and beheaded civilians.”

The Syrian government tightened the siege, reaffirming their concern that ISIS fighters controlled territory so near the heart of the Syrian capital. Al-Jazeera reporter Stefanie Dekker explained that “It is a complex situation. The government forces control the northern part [of the camp] towards Damascus. It is their priority to keep the capital safe. . . The fact that ISIL [ISIS] fighters are less than 10km away is of a huge concern. If they allow a humanitarian corridor, who will be coming out?” Despite these concerns, al-Jazeera reported that the Syrian government did indeed allow residents to leave, as some 2,000 were able to be evacuated at this time, with many finding shelter in government schools in neighboring areas.

Fighters from the pro-government Popular Front for the Liberation of Palestine-General Command (PFLP-GC) confronted ISIS fighters at the northern edge of the camp to stop their advance, while the Syrian military bombed ISIS positions. Foreign Policy quoted one PFLP-GC fighter originally from Yarmouk as saying “I will not stop until they [ISIS] leave the camp. . . I have no problem staying here in this position, not sleeping, digging out tunnels, and fighting. We need to do this,” while quoting another PFLP-GC fighter who felt that “If we weren’t here fighting, [the militants] would be able to access Damascus. . . We’re here to protect the camp and Damascus.”

The New York Times acknowledged the ISIS threat to Syrian capital at this time, observing that “By seizing much of the camp” ISIS had “made its greatest inroads yet into Damascus,” while the Washington Post noted that “Their new push puts [ISIS] within five miles of the heart of the capital... even as they are on the retreat in Iraq.”

As a result of this threat, 14 Palestinian factions agreed to form a joint operations room with the Syrian army to try defeat ISIS militarily and purge its militants from the camp. PLO Executive Committee member Ahmed Majdalani told a press conference that “The decision will be jointly made by the two sides to retake the camp from the obscurantist terrorists who seize it now.” However, the PLO soon reversed course, claiming the Palestinians should not be dragged into any conflict, allegedly as a result of pressure on Palestinian President Mahmoud Abbas from Saudi Arabia and Qatar.

US Policy of Leveraging ISIS Against Assad

The US preference for the advance of ISIS toward Damascus, even as US warplanes were bombing the terror group in Eastern Syria and Iraq, was explained by Secretary of State John Kerry. Kerry shockingly admitted that US planners actually welcomed the ISIS push toward Damascus, which they felt they could leverage to put pressure on Assad to give up power to the US-backed opposition. As discussed above, Kerry explained that, “We were watching. We saw that Daesh [ISIS]was growing in strength. And we thought Assad was threatened. We thought we could manage that Assad might then negotiate. Instead of negotiating, he got Putin to support him.”

The New York Times reported in detail on the meeting, an audio recording of which was leaked, as did the Guardian and CNN. Despite Kerry’s shocking comments, none of these three news outlets mentioned his admission that US planners welcomed the ISIS advance on Damascus, presumably due to requests by US intelligence officials.

CNN initially posted the full audio of the leaked tape, but later took it down, claiming in an editor’s note to have done so for the safety of participants in the meeting.

Enter Russia

The Nusra/FSA advance on Latakia and ISIS advance on Damascus and the M5 highway provides the context in which Russian forces intervened in Syria in September 2015. Writing in the New York Review of Books, Charles Glass confirmed Secretary of State Kerry’s view that Russia intervened in the conflict to prevent the fall of the Syrian government to jihadists from Nusra and ISIS. Glass quoted “one analyst familiar with Russian decision making” as noting that by autumn 2015, “it was clear Damascus could fall,” which was a “red line” that “Russia could not abide.” As a result, Russia “increased air support and sent ground forces to guarantee the survival of Syria’s government, army, and institutions. Its action saved Damascus from an insurgent onslaught and gave the Syrian army the upper hand in the long seesaw war.”

US planners responded to Russian efforts to save Damascus and Latakia from Nusra and ISIS respectively by immediately increasing shipments of TOW anti-tank missiles to the FSA, despite their knowledge these weapons had helped Nusra conquer Idlib and threaten Latakia.

The New York Times reported on October 12, 2015, just two weeks after the start of the Russian intervention, that rebels were now receiving as many TOW missiles as they asked for. One FSA commander explained, “We get what we ask for in a very short time,” while another rebel official in Hama called the supply “carte blanche,” suggesting, “We can get as much as we need and whenever we need them.” The NYT also acknowledged that FSA cooperation with Nusra constituted a “tactical alliance that Free Syrian Army commanders describe as an uncomfortable marriage of necessity, because they cannot operate without the consent of the larger and stronger Nusra Front.”

Daveed Gartenstein-Ross of the Foundation for Defense of Democracies (FDD) observedthat “at this point it is impossible to argue that U.S. officials involved in the CIA’s program cannot discern that Nusra and other extremists have benefited” from CIA weapons shipments to Syrian rebels, “And despite this, the CIA decided to drastically increase lethal support to vetted rebel factions following the Russian intervention into Syria in late September.”

The CIA knew where TOW Missiles were going

Understanding that TOW shipments were benefitting al-Qaeda, US planners stopped short of also providing anti-aircraft missiles to FSA groups. US planners have strongly supported Syrian rebel groups, but not at any cost. The New York Times noted that the Russians “appear to be using techniques honed in Afghanistan, where the occupying Soviet Army fought insurgents who were eventually supplied with antiaircraft missiles by the United States. Some of those insurgents later began Al Qaeda. That specter hangs over American policy, and has kept Syrian insurgents from receiving what they most want: antiaircraft missiles . . .”

Opposition supporters, including many oddly identifying as socialists, complained bitterly that US planners were not willing to take the step of providing anti-aircraft missiles to the FSA, for the ultimate benefit of al-Qaeda. Author and opposition supporter Leila al-Shami bizarrely suggested the US refusal to provide anti-aircraft missiles to the rebels proves that “The United States support for Free Syrian Army militias on the ground has never really been any more than rhetoric. It’s never really given any serious support to them.” Al-Shami ignores the over $1 billion of weaponry and assistance provided by the CIA to the rebels directly, not to mention the much larger amounts of aid provided by America’s Gulf partners to both the FSA and Salafi rebel groups Ahrar al-Sham and Jaish al-Islam since the start of the Syrian conflict, with US approval.

Some opposition supporters expressed to Secretary of State Kerry that they would not be satisfied unless the US military intervened directly on behalf of the rebels to depose Assad, despite the illegality of doing so under international law, and potential that such an intervention could trigger a direct conflict between the US and Russia.

Rebel-affiliated media activists tweeting under the guise of the young girl, Bana al-Abed, suggested the US should come to the aid of the al-Qaeda-dominated rebels in Aleppo even at the risk of starting World War III with Russia.


US planners welcomed rebel gains in Syria, including by jihadist groups advocating genocide against Syria’s Alawite population such as ISIS and Nusra, because these gains bolstered the broader US goal of toppling the Syrian government, in an effort to weaken its close allies, Iran and Hezbollah.

US planners wished to see rebel gains in Syria, in spite of the obviously catastrophic consequences for Syrian civilians that rebel success would bring. US support for the rebels belies the myth of US “inaction” in Syria, and the myth that any US intervention would be for the sake of preventing massacres and even genocide, rather than in support of it.

The Syrian government is an authoritarian police state that has long been in need of drastic reform. Like all governments fighting a war, the Syrian government has killed civilians and committed crimes against innocent people during the course of the Syrian conflict (though the extent of these crimes has been massively inflated and often even fabricated in the Western press). Similarly, the Russian military deserves harsh criticism, as it has undoubtedly killed civilians unnecessarily during air strikes against the rebels. The deaths of these civilians are tragic, as are the deaths of civilians in Raqqa and Mosul killed by US bombs in the effort to defeat ISIS in those cities.

It is unclear however, how Syrian civilians generally would have benefited if US planners had succeeded in accomplishing their goal of helping the predominantly jihadist Syrian rebels, including al-Qaeda and ISIS, topple the Syrian government. One Syrian fighting for a pro-government militia articulated why he and many Syrians in general oppose the rebels and the Syrian political opposition which supports them: “At first, my family sympathized with the protesters. But then it became obvious that the hardliners among the secular opposition work in the interests of Turkey and the Arab monarchies. Plus the course for Islamization was visible early on, and that was a concern. Like pretty much all normal people, my family, my friends and everyone I know in Syria are strongly against Wahhabis and religious extremism in general [emphasis mine],” with Wahhabism referring to the state ideology of Saudi Arabia, from which al-Qaeda and ISIS draw much of their inspiration.

In Syria’s major population centers, civilians are terrified that the rebels will come, and look to the Syrian army to protect them. Large numbers of civilians leave any city where rebels gain a foothold and seek refuge primarily in government controlled areas of the country or outside of Syria itself. The threat of Syrian and Russian bombing certainly plays a role in this, but it is clear that rebel looting, the murder of minorities and those sympathetic to the government, and the imposition of extremist religious rule do not endear the rebels to Syria’s civilian population.

Contrary to most reporting on Syria, which suggests the "civil war" has pitted Syria’s entire Sunni population against its Alawite, Christian, Druze, Shia and other minorities, in fact many Syrian Sunnis support the government and oppose Salafi-Jihadism, the extremist religious ideology undergirding most rebel groups in Syria.

The Syrian government would have fallen long ago, if not for Sunni support. For example, the rebels were hated even in the majority Sunni city of Aleppo and many Sunnis continue to fight in the Syrian army against the rebels, while many Syrian Sunnis have been killed by the rebels for this support of the government. For this reason, describing the rebels as “Sunni” is misleading. A more accurate description of Syria’s rebels would be “Salafi-Jihadi” or “Wahhabi,” or “Takfiri,” or “religious fundamentalist” rather than “Sunni.”

Had Damascus and Latakia fallen to the rebels, not only Alawites and Christians, but also pro-government Sunnis and Sunnis opposed to Salafi-Jihadi ideology would have been massacred, not to mention members of Syria’s LGBTQ community.

The Russian intervention in Syria then, by all indications, prevented this horrific outcome for Syrians of all ethnic and religious identities, despite the best efforts of US planners to achieve the “catastrophic success” in Syria they had hoped for.

Published:7/27/2018 12:08:04 AM
[Markets] A Tale Of Two Markets: Trade War Relief Mixed With Tech Rout

It was a tale of two markets on Thursday, with industrial and European stocks opening much higher on Thursday, pushing world stocks to new four-month highs after Donald Trump and Jean-Claude Juncker agreed to negotiate on trade, putting fears of a transatlantic trade war on hold for the time being. At the same time, Nasdaq futures and tech stocks around the globe were hit after Facebook shocked investors yesterday, by not only missing on revenue (for the first time in 3 years), and number of users, but with its unexpectedly low guidance. S&P 500 futures also pointed lower, however the drop has been contained.

In what the EU chief called a “major concession,” President Trump agreed on Wednesday to refrain from imposing car tariffs while the two sides launch negotiations to cut other trade barriers. As a result, there were gains across the board for European stocks on Thursday morning, led by the continent’s auto sector, which was up 2% at one point German’s export-reliant and auto-heavy index rose 1.4%.

It wasn't just Europe: the global trade truce sent the MSCI world equity index to its highest level since March 16.

“The lifting of the threat of tariffs on the auto sector in particular is a major development. We’ve not seen a lot of actual measures implemented but it should lift the confidence of manufacturers,” said RBC European economist Cathal Kennedy.
“The feedthrough should come through in the manufacturing sector and confidence indicators in the coming months.”

Meanwhile, some more dark clouds gathered over China: Asian stocks were held back by weakness in China, where the Shanghai Composite index fell 0.7% and blue-chip shares lost 1.1%, despite China announcing even more stimulus overnight. 

Why? Because with Europe now siding with the US, and with transatlantic mood was improving, the collapse of the Qualcomm-NXP deal means that Trump will focus his attention on trade war with China even more.

And then there was Facebook, which plunged as much as 24% after reporting Q2 earnings, but it was the conference call that shocked investors, and sent the stock into freefall. In fact, this was the single most costly conference call in history. At one point, the total market value lost by Facebook was $151 billion - representing the biggest one day stock wipeout in history - and more than the entire market cap of Bitcoin.

Nasdaq 100 futures were pressured by Facebook’s collapse; eslewhere NXP Semiconductors plunged -10.2% after it confirmed Qualcomm’s (+5.5% pre-market) exit from the deal. Qualcomm will pay a USD 2bln termination fee.

Adding insult to injury, Facebook is the most widely held stock among the hedge-fund community by a wide margin  according to Goldman, which means today there may be some serious margin calls.

If anything, Facebook's collapse showed just how complacent the momentum-chasing market has become, and how susceptible it is to sudden, sharp repricings. For now, however, FANG has been defangded to just AG, and A has yet to report.

It wasn't just tech on the receiving end: automakers General Motors, Ford Motor and Fiat Chrysler Automobiles have cut profit forecasts, while Daimler blamed U.S.-China tariffs for a 30% drop in second-quarter profit. GM suffered its biggest daily drop in 3 years.

Focus will now turn back to central bank policy: as Reuters notes, the softer U.S.-EU tone should help the European Central Bank stick with its plan to gradually withdraw stimulus when it meets later on Thursday. Few expect Draghi to make any notable announcement today, however, in what is expected to be a status quo call.

The Euro weakened as Mario Draghi is expected to repeat a guidance that bond purchases will end in December and interest rates could start rising after the summer of 2019. The yen fell 0.3% against the dollar, reversing 6 consecutive days of gains, but traders will carefully watch the BOJ's policy announcement on July 30-31 after this week’s brief jump in yields and the Japanese currency on reports authorities were debating paring back some stimulus. BoJ is reportedly reviewing the allocation of ETF purchases and is considering purchasing more ETFs linked to TOPIX and less associated with Nikkei indices, but is likely to maintain the total annual ETF buying at JPY 6tln. In separate reports, Twitter sources noted the BoJ may consider dropping JGB buying operation dates release and may allow slight JGB yield curve steepening, while there BoJ were also said to see higher super long yields having a favourable effect.

The Bloomberg Dollar Spot Index rose 0.1% after slump on Wednesday with dollar marginally stronger against most G-10 peers.

Treasuries rose, in contrast to a drop in bonds across most of Europe. Japan’s benchmark 10-year bond yield climbed 3.5bps to 0.1%, a level last seen in July 2017. Yield rose as much as 6bps on Monday, the most intraday since  September 2016, following media reports of possible changes to the central bank’s ultra-loose monetary policy at its meeting next week.

There is a divergence in the performance of WTI (-0.1%) and Brent (+0.8%) with the latter supported by reports that Saudi Arabia have temporarily halted shipments via the Red Sea shipping lane after 2 vessels were attacked by Houthi rebels. This was then followed by reports that Kuwait are debating whether to halt oil exports via the passage given  recent events. In metals markets, spot gold (-0.2%) is slightly softer in European trade amid the modestly firmer USD after the PBoC bucked their recent trend by strengthening the CNY fix rate. Elsewhere, metals prices in London have broadly been supported by the aforementioned breakthrough in trade talks between the EU and US. Steel prices were seen higher during Asia-Pac trade with gains capped by fears over the Chinese crackdown on domestic pollution.

Data include wholesale inventories and durable-goods orders. Allergan, Comcast, Conoco, Mastercard, McDonald’s, Amazon, and Intel are among companies reporting earnings

Market Snapshot

  • S&P 500 futures down 0.1% to 2,837.25
  • STOXX Europe 600 up 0.5% to 389.13
  • MXAP up 0.4% to 168.47
  • MXAPJ up 0.1% to 544.57
  • Nikkei down 0.1% to 22,586.87
  • Topix up 0.7% to 1,765.78
  • Hang Seng Index down 0.5% to 28,781.14
  • Shanghai Composite down 0.7% to 2,882.23
  • Sensex up 0.3% to 36,953.82
  • Australia S&P/ASX 200 down 0.05% to 6,244.50
  • Kospi up 0.7% to 2,289.06
  • German 10Y yield rose 1.2 bps to 0.408%
  • Euro down 0.08% to $1.1720
  • Italian 10Y yield fell 0.7 bps to 2.411%
  • Spanish 10Y yield rose 0.9 bps to 1.36%
  • Brent futures up 0.6% to $74.37/bbl
  • Gold spot down 0.3% to $1,227.54
  • U.S. Dollar Index little changed at 94.27

Top Overnight News from Bloomberg

  • Facebook Inc.’s scandals are finally hitting the company where it hurts: growth; the company’s shares plunged as much as 24 percent in after-hours trading, which if replicated in Thursday’s regular session would be the biggest stock-market wipeout in American history
  • Six years to the day since his historic pledge to do ‘whatever it takes’ to keep the euro together, Mario Draghi is likely to confirm that the currency bloc is back to relatively solid economic health
  • British officials are considering allowing the EU to impose its market regulations on Northern Ireland, while the rest of the U.K. breaks away after Brexit, according to a person familiar with the matter
  • U.S. and EC leaders pledged to expand European imports of U.S. liquefied natural gas and soybeans and both vowed to lower industrial tariffs, excluding autos. The U.S. and European Union will “hold off on other tariffs”’ while negotiations proceed, as well as re-examine U.S. steel and aluminum tariffs and retaliatory duties imposed by the EU “in due course,” Juncker said
  • British officials are considering allowing the EU to impose its market regulations on Northern Ireland, while the rest of the U.K. breaks away after Brexit, according to a person familiar with the matter who declined to be named outlining proposals that aren’t public
  • Cities outside London are more exposed to the effects of a bad deal for financial services after Brexit than the U.K. capital, according to a report published on Thursday
  • Some Chinese banks have received notice from regulators that a specific capital requirement will be eased in order to support lending, as the authorities try to mitigate increasing risks to the economy from the trade war
  • European carmakers surged after President Donald Trump and European Commission President Jean- Claude Juncker agreed to declare a ceasefire in their trade spat while they negotiate lower barriers to transatlantic commerce

The major Asia-Pac equity markets traded subdued as a plethora of corporate updates dominated news flow and somewhat drowned out the US-EU trade talks where concessions were made to avoid a trade war, while Nasdaq 100  futures were also pressured overnight as Facebook’s market cap dropped by around USD 140bln after revenue and active user numbers missed expectations. ASX 200 (Unch) and Nikkei 225 (-0.1%) were subdued with M&A news the catalyst for the biggest movers in Australia as Fairfax surged from a takeover deal by Nine Entertainment which subsequently weighed on the latter, while the Japanese benchmark was dampened by a firmer currency and reports the BoJ could adjust its ETF purchases more towards those associated with the TOPIX and less at those associated with Nikkei indices. Shanghai Comp. (-0.7%) and Hang Seng (-0.5%) were also lower alongside the broad lacklustre tone in the regional majors and following another consecutive liquidity drain by the PBoC. Finally, 10yr JGBs were lower as yields continued to gain in which the 10yr yield rose to its highest level in a year of 0.1% amidst the speculation of a possible BoJ policy tweak next week, while today’s 2yr JGB auction was also weaker than previous on nearly all metrics. BoJ is reportedly to review the allocation of ETF purchases and is considering purchasing more ETFs linked to TOPIX and less associated with  Nikkei indices, but is likely to maintain the total annual ETF buying at JPY 6tln. In separate reports, Twitter sources noted the BoJ may consider dropping JGB buying operation dates release and may allow slight JGB yield curve steepening, while there BoJ were also said to see higher super long yields having a favourable effect.

Top Asian News

  • China Is Said to Ease Bank Capital Rule to Free Up Lending
  • China’s Yuan, Stocks Lag Global Peers as Trade Concerns Persist
  • China Approves Essilor, Luxottica Merger Deal With Conditions
  • Old-School Media Unite in Australia to Confront Netflix Era

European bourses trade mostly higher across the board as markets digest the fallout of yesterday’s EU-US trade talks and react to a slew of large cap earnings. Sentiment for the auto sector in particular has been boosted by news that the EU and US agreed to not raise tariffs on autos and parts during negotiations. This has boosted the likes of Volkswagen (+3.1 %), BMW  (+3.0%) and Daimler (+2.3%) with the latter seeing gains capped by its pre-market earnings report; DAX outperforms its peers with gains of 1.4% (vs. Eurostoxx 50 +0.8%). Elsewhere, on a sector basis, energy names lag their peers amid losses in Shell (-2.1%) with the Co.’s USD 25bln buyback and 30% increase in profits not enough to satisfy investors with some flagging concerns surrounding cashflow; FTSE 100 (Unch) lags its peers given Shell’s weighting in the index, with the FTSE also hampered by recent gains in the GBP and an overall lack of upside catalysts. Other notable movers post-earnings include: Airbus (+5.0%), British American Tobacco (+4.5%), Smith & Nephew (+3.8%), KPN (+3.4%), Roche (+2.0%), Nestle (+1.7%), Nokia (-8.1%), Valeo (-6.7%), AB Inbev (-5.1%), Schneider Electric (-1.4%), Anglo American (-1.2%) and Diageo (-1.1%).

Top European News

  • Repsol Earnings Miss, Rising Costs Offset Higher Oil Output
  • Accor Drops Plan to Buy Minority Stake in Air France-KLM
  • Anglo Bucks Mining Trend by Pouring Profit Into Mega Project
  • Barclays, UBS Win Dismissal From Silver, Gold Price-Fixing Suits
  • Trump-Juncker LNG Pledge Is Just Hot Air for Europe’s Gas Market

In FX, there was another DXY downturn and breach of near term support for the index in wake of a truce on tariffs struck between Trump and  Juncker yesterday, pending more talks to resolve the trade barriers and import restrictions at issue. The DXY is trying to stabilise and pare some losses after hitting a new low for the week just above 94.000 vs 94.206 at worst on Monday. Chart-wise, 93.950 is now within striking distance if the index fails to sustain recovery momentum and loses more ground vs G10 peers. JPY - The biggest beneficiary of the latest Usd downturn, but also in its own right as hawkish BoJ reports continue to circulate ahead of next week’s policy meeting. Consequently, the headline pair is back under 111.00 and looking at bearish/downside tech levels around 110.65 (50% Fib) before 110.51 (55 DMA). AUD - Back to the bottom of the pile and heavy again above 0.7400 vs its US counterpart as initial euphoria over the aforementioned US-EU ‘agreement’ wanes amidst ongoing US-China strains that have more bearing down under. YUAN - Intervention of sorts, with a marked drop in the PBoC’s official Usd/Cny fix overnight (to 6.7662 vs 6.8040 on  Wednesday) and widespread reports of 1 year forward selling down to flat points from 100+ against spot at 6.7800 and 6.7900 for the Cnh.

In commodities, once again markets are seeing a divergence in the performance of WTI (-0.1%) and Brent (+0.8%) with the latter supported by reports that Saudi Arabia have temporarily halted shipments via the Red Sea shipping lane after 2 vessels were attacked by Houthi rebels. This was then followed by reports that Kuwait are debating whether to halt oil exports via the passage given recent events. In metals markets, spot gold (-0.2%) is slightly softer in European trade amid the modestly firmer USD after the PBoC bucked their recent trend by strengthening the CNY fix rate. Elsewhere, metals prices in London have broadly been supported by the aforementioned breakthrough in trade talks between the EU and US. Steel prices were seen higher during Asia-Pac trade with gains capped by fears over the Chinese crackdown on domestic pollution.

Looking at the day ahead now, the main focus for markets will be the aforementioned ECB monetary policy meeting at 7:45am ET followed by Draghi’s press conference after. Data-wise, we'll get the June advance goods trade balance, preliminary June wholesale inventories, June retail inventories, preliminary June durable goods and capital goods orders and the July Kansas City Fed manufacturing activity reading are all slated for release. Away from the data, the WTO will hold a General Council meeting to cover issues related to the US-China trade conflict, while notable earnings releases for the day include Intel and Amazon.

US Event Calendar

  • 8:30am: U.S. Wholesale Inventories MoM, June P, est. 0.3%, prior 0.6%
  • 8:30am: U.S. Initial Jobless Claims, July 21, est. 215k, prior 207k; Continuing Claims, July 14, est. 1733k, prior 1751k
  • 8:30am: U.S. Durable Goods Orders, June P, est. 3.0%, prior -0.4%; Durables Ex Transportation, June P, est. 0.5%, prior 0.0%
  • 8:30am: U.S. Cap Goods Orders Nondef Ex Air, June P, est. 0.5%, prior 0.3%; U.S. Cap Goods Ship Nondef Ex Air, June P, est. 0.4%, prior 0.2%
  • 9:45am: U.S. Bloomberg Consumer Comfort, July 22, no est., prior 58.8
  • 11am: Kansas City Fed Manf. Activity, est. 25, prior 28

DB's Craig Nicol concludes the overnight wrap

Needless to say, the meeting last night between President Trump and European Commission President Juncker has been the big news over the last 10 hours or so. Indeed after much second guessing throughout yesterday leading into the meeting, news broke just before 9pm BST that the two sides had reached a ceasefire in the trade war. Specifically, Trump and Juncker agreed to expand European imports of US LNG and soybeans, while both sides also agreed on lowering industrial tariffs. Trump also said that the US and EU were to work towards “zero” tariffs and called it a “new phase” of trade relations, while adding that the two sides would try to “resolve” steel and aluminium tariffs imposed earlier this year by the US.

It’s worth noting that trade in vehicles and car parts was left out of the statement, which as we know was the main point of contention going into the meeting especially after a Washington Post article hit the wires in the afternoon  stating that several of President Trump’s senior economic advisors were of the view that the President planned to impose a 25% tariff on nearly $200bn in “foreign-made automobiles” this year. However, the specific details of the statement last night between Trump and Juncker are less important right now and it’s more likely that this marks the start of what could well be a long negotiation period. Signs of a compromise are clearly more significant for now in markets with the threat of an all-out trade war receding. That said DB’s Alan Ruskin made the point last night that caution is still warranted, most obviously on what this might mean for US-China trade relations where problems are more deep-seated. So plenty still to ponder then.

In terms of what markets did, well US equity markets spent most of yesterday gently climbing but the initial headlines about the EU offering concessions following the meeting saw stocks sharply rise into the close, and that continued as more positive headlines emerged. The S&P 500, Dow and Nasdaq finished +0.91%, +0.68% and +1.17% respectively. Tech led gains while telecoms was the only sector to finish in the red for the S&P. With much of the day spent focused on autos, the sub-sector closed down -1.46% however did pare losses of as big as -5.35% at one stage. More on it shortly. Meanwhile credit indices in the US were tighter with CDX IG finishing 1.7bps tighter while Treasury yields climbed into the close with 10y yields finishing +2.6bps higher at 2.975% and the 2s10s curve flattening 1.0bps to around 30bps. The EUR/USD rose +0.64% from the lows to finish +0.36% on the day. Metals and Oil were also stronger across the board.

This morning in Asia the enthusiasm following the Trump-Juncker meeting has faded quickly with the focus quickly turning back to corporate earnings after Facebook shares plunged as much as 24% after missing consensus revenue forecasts for the first time since 2015. Depending on what happens today, we could be looking at one of the largest valuation declines for a big tech company ever. Nasdaq futures are down -0.88% as we type on the news while the Nikkei (-0.08%), Hang Seng (-0.74%) and Shanghai Comp (-0.63%) have all turned lower.Away from all that JGB yields are  higher this morning (2y +0.9bps and 10y+2.3bps) along with the Yen (+0.22%) following more reports that the BoJ might be considering a review of its ETF allocation. The 10y JGB is close to 0.09% now so it’ll be interesting to see if the BoJ steps in to offer to buy bonds again like it did on Monday.

Back to yesterday, where prior to the Trump-Juncker meeting much of the day was spent digesting the moves in the auto sector, firstly following corporate results from General Motors and Fiat Chrysler, and then following the Washington Post tariff story. General Motors and Fiat Chrysler closed -4.64% and -15.50% respectively (the latter falling by the most since January 2017) following downgraded earnings guidance for the full year. The bad news kept coming after the US close too when Ford announced weaker than expected results and a projected $11bn in charges for a five-year restructuring plan. Much was made of the GM results in particular though after it became the latest company to cite headwinds from the trade war. Indeed higher raw material prices, including steel and aluminium as a result of the tariffs, are expected to be a $1bn headwind in 2018 which is almost double what the company had previously expected. This follows Harley Davidson and Whirlpool as other high profile US companies this week highlighting risks to profits from tariffs, forcing the companies to raise prices. While last night’s developments between Trump and Juncker were positive, it’s still very early days so it’s unlikely that this is the last we hear of corporates warning about headwinds from tariffs. Indeed Daimler are due to report any second now so it’s worth keeping an eye on that.

Staying with autos, as a result of that fall for Fiat Chrysler, in Europe the Stoxx Auto and Parts sector collapsed -2.90% for the second worst day for the sector this year. Other notable auto names which retreated included Volkswagen (-2.72%), Renault (-2.14%) and BMW (-2.05%). The broader Stoxx 600 index finished -0.26% with these moves obviously coming before the evening developments post the Trump and Juncker meeting. Core bond markets in Europe were also largely 0.5bps to 1.0bp lower.

So as the market continues to digest the developments from the Trump-Juncker meeting last night, there’s also an ECB meeting to keep an eye on at lunchtime today. As a reminder, our European economists expect Mario Draghi to aim for a “Goldilocks” tone – that is neither too hawkish nor too dovish. In their view the impression from recent press stories is that the ECB thinks the market has priced its new policy stance too dovishly. Using the team’s modified Taylor Rule, they show that the market is fully pricing an escalation of trade war - a markedly worse economic scenario than the ECB’s baseline or the consensus. Without a clear materialization of the risk scenarios, they believe the market should price a first hike by end 2019 with a reasonable probability. DB’s baseline call is a 20bp deposit rate hike in September 2019 (25bp refi hike).

In terms of the limited data that was out yesterday, in the US, June new home sales fell -5.3% mom to the lowest in eight months (631k vs. 668k expected). Meanwhile the median selling price fell just over 4% yoy for the second month.  In Europe the Euro area’s June M3 money supply reading rose to a five month high of 4.4% yoy (vs. 4.0% expected). Adjusting for sales and securitizations, growth in household loans was steady at 2.9% yoy but loans to non-financial corporates rose to a new high of 4.1% yoy. In Germany, the July IFO survey nudged +0.1pts higher mom to 105.2 (vs. 104.9 expected), while the expectations index eased 0.9pt mom to the lowest level since March 2016 (98.2 vs. 98.3 expected). Here in the UK, the CBI’s Distributive Trades Survey reported that a net 20% of retailers are seeing positive annual growth in sales - with a net 20% expecting growth to continue next month.

Finally, as for the latest on Brexit, Irish Foreign Minister Coveney has called on the EU to be more flexible in its Brexit negotiations with the UK. He believes the latest proposal by PM May could be accommodated by both sides, but there  are “challenges” to some parts of her proposal - including a customs system where British officials collect EU tariffs at the UK border on goods destined for other countries in the bloc. Elsewhere, the BoE’s Sam Woods noted the central bank has contingency planning for Brexit, similar to its preparations for the Scottish independence referendum and Brexit vote earlier. He added that BoE’s stress tests last year showed banks are strong enough to weather a disorderly Brexit based on its own capital and liquidity.

Looking at the day ahead now, the main focus for markets will be the aforementioned ECB monetary policy meeting at 12.45pm BST followed by Draghi’s press conference after. Data-wise, we'll get the August consumer confidence print for Germany and July consumer confidence data for France. In the US, the June advance goods trade balance, preliminary June wholesale inventories, June retail inventories, preliminary June durable goods and capital goods orders and the July Kansas City Fed manufacturing activity reading are all slated for release. Away from the data, the WTO will hold a General Council meeting to cover issues related to the US-China trade conflict, while notable earnings releases for the day include Intel and Amazon.





Published:7/26/2018 6:06:06 AM
[Markets] Millionaire Democrat Wants To Tax Parents With More Than Two Kids As "Irresponsible Breeders"

Authored by Mac Slavo via,

A democrat congressional candidate in Pennsylvania has desires to tax parents who have more than two children as “irresponsible breeders.”  Scott Wallace is a population control zealot who has donated over $7 million to population control groups.

Wallace is also supported and endorsed by both Planned Parenthood and NOW (National Organization for Women). According to The Daily Wire, Wallace, a millionaire and democrat who believes in taxing families with more than two kids for being privileged, also believes that the tax would be on “the privilege of irresponsible breeding.”

Between 1997 and 2003, Wallace gave $420,000 to Zero Population Growth (ZPG) — now Population Connection — an organization co-founded by “Population Bomb” author Paul Ehrlich, Fox News reported.

From before its inception, ZPG had announced its intentions to tax large families for the “privilege of irresponsible breeding.” A 1968 brochure advocated abortion to stabilize population growth and claimed that “no responsible family should have more than two children.” Therefore, “irresponsible people who have more than two children should be taxed to the hilt for the privilege of irresponsible breeding.” –PJ Media

Wallace’s fund (Wallace Global Fund) also gave $20,000 to the Center for the Advancement of the Steady State Economy (CASSE) in 2010. CASSE is an environmentalist group that sees economic growth as undesirable. The group supports an economy with “stable or mildly fluctuating levels” and a society with equal birth and death rates. CASSE calls this stagnant state of affairs “maturing.” 

CASSE still supports zero population growth and executive board member Herman Daly has pushed for reproduction licenses (permission from the government to have children). This bureaucratic control over birth would allow women to have only two children unless they buy the license for more children from other women who do not reproduce. Daly called this program the “best plan yet offered” to limit population growth.

If you’ve ever wondered how close we are to totalitarianism, you no longer have to.  It’s right around the corner. Abortion and population control movements can be traced back to the horrific racism of the early eugenics movement, where activists like Margaret Sanger called for more babies for the “fit” and less for the “unfit.”

Published:7/25/2018 3:57:36 PM
[Markets] Tesla Stock Tumbles On News It Is Seeking Cash Back From Suppliers

Tesla shares tumbled more than 4% in pre-market trading after a WSJ report that the electric car maker has turned to some suppliers for a refund of previously made payments in what the WSJ headlined as a bid "to turn a profit" but which reading through the article, said was a strategy "essential to Tesla’s continued operation", in other words if the cash demand fails, Tesla's future is in jeopardy.

And, as we discussed last night, Tesla was not seeking to merely renegotiate contracts going forward, but in an unprecedented ask, the electric vehicle maker requested supplier return what it called a meaningful amount of money of its payments since 2016, effectively demanding that companies that had booked profits on sales to Tesla revise their books going back some two years ago.

Quoted by Reuters, Morningstar analyst David Whiston said that “automakers often have brutal pricing demands on suppliers for future work, but retroactive rebates is not something we hear much about, and this is troubling for us to hear."

On Twitter, Elon Musk appears to confirm the report saying that "Only costs that actually apply to Q3 & beyond will be counted. It would not be correct to apply historical cost savings to current quarter."

The latest demand merely adds to investors already substantial concerns about the company's liquidity. Tesla has been burning through cash as it ramps up production of its Model 3 sedan, with total cash burn in the first quarter hitting $12 million per day.

While Musk has said the company does not need to raise cash this year, several analysts have predicted that the electric car maker would need to raise capital soon.

Tesla has said the company will be profitable in the third and fourth quarters of the year, even though it has posted a loss of $709.6 million in its first quarter ended March 31.

Last month, Tesla said it was cutting 9% of its workforce, amounting to several thousand jobs across the company in a bid to slash costs and become sustainably profitable without endangering the ramp up of Model 3 production. Meanwhile, there has been a sustained exodus of top level executive from the company, which accelerated in the current quarter.

Tesla shares fell 4.3% to $300.27 in premarket trading on Monday, cutting the company's market cap by over $2 billion.




Published:7/23/2018 7:44:47 AM
[Markets] British Assassination Campaign Targeting Russian Exiles?

Authored by Finian Cunningham, via The Strategic Culture Foundation,

Over the past decade or so, a disturbing number of Russian nationals living in Britain have met untimely deaths. The victims – at least 14 – have been high-profile individuals, such as oligarch businessman Boris Berezovsky or former Kremlin security agent Alexander Litvinenko. All were living in Britain as exiles, and all were viewed as opponents of President Vladimir Putin’s government.

Invariably, British politicians and news media refer to the deaths of Russian émigrés as “proof” of Russian state “malign activity”. Putin in particular is accused of ordering “the hits” as some kind of vendetta against critics and traitors.

The claims of Russian state skulduggery have been reported over and over without question in the British media as well as US media. It has become an article-of-faith espoused by British and American politicians alike. “Putin is a killer,” they say with seeming certainty. There is simply no question about it in their assertions.

The claims have also been given a quasi-legal veracity, with a British government-appointed inquiry in the case of Alexander Litvinenko making a conclusion that his death in 2006 was “highly likely” the result of a Kremlin plot to assassinate. Putin was personally implicated in the death of Litvinenko by the official British inquiry. The victim was said to have been poisoned with radioactive polonium. Deathbed images of a bald-headed Litvinenko conjure up a haunting image of alleged Kremlin evil-doing.

Once the notion of Russian evil-doing is inculcated the public mind, then subsequent events can be easily invoked as “more proof” of what has already been “established”. Namely, so it goes, that the Russian state is carrying out assassinations on British territory.

Thus, we see this “corroborating” effect with the alleged poisoning of a former Russian double-agent, Sergei Skripal, and his daughter in Salisbury back in March this year.

What actually happened to the Skripals is not known – who are said to have since recovered their health, but their whereabouts have not been disclosed by the British authorities. Nevertheless, as soon as the incident of their apparent poisoning occurred, it was easy for the British authorities and media to whip up accusations against Russia as being behind “another assassination attempt” owing to the past “established template” of other Russian émigrés seeming to have been killed by Kremlin agents.

For its part, the Russian government has always categorically denied any involvement in the ill-fate of nationals living in exile in Britain. On the Skripal case, Moscow has pointed out that the British authorities have not produced any independently verifiable evidence against the Kremlin. Russian requests for access to the investigation file have been rejected by the British.

On the Litvinenko case, Russia has said that the official British inquiry was conducted without due process of transparency, or Russia being allowed to defend itself. It was more trial by media.

A common denominator is that the British have operated on a presumption of guilt. The “proof” is largely at the level of allegation or innuendo of Russian malfeasance.

But let’s turn the premise of the argument around. What if the British state were the ones conducting a campaign of assassination against Russian émigrés, with the cold-blooded objective of using those deaths as a propaganda campaign to blacken and criminalize Russia?

In a recent British media interview Russia’s Foreign Minister Sergei Lavrov was typically harangued over alleged Russian malign activity in Britain. Lavrov rightly turned the question around, and said that the Russian authorities are the ones who are entitled to demand an explanation from the British state on why so many of its nationals have met untimely deaths.

The presumption of guilt against Russia is based on a premise of Russophobia, which prevents an open-minded inquiry. If an open mind is permitted, then surely a more pertinent position is to ask the British authorities to explain the high number of deaths in their jurisdiction.

As ever, the litmus-test question is: who gains from the deaths? In the case of the alleged attempted assassination of Sergei Skripal and his daughter, would Russia risk such a bizarre plot against an exile who had been living in Britain undisturbed for 10 years? Or would Britain gain much more from smearing Moscow at the time of President Putin’s re-election in March, and in the run-up to the World Cup?

The more recent alleged nerve-agent poisoning of two British citizens – Charlie Rowley and Dawn Sturgess – in the southern English town of Amesbury revived official anti-Russia accusations and public fears over the earlier Skripal incident in nearby Salisbury.

The Amesbury incident in early July occurred just as a successful World Cup tournament in Russia was underway. It also came ahead of US President Donald Trump’s landmark summit with Vladimir Putin in Helsinki.

Again, who stands to gain most from these provocative events? Russia or Britain?

Another revealing twist in the presumed narrative of “Kremlin criminality” came from a recent interview given to Russian news media by the daughter of the deceased oligarch Boris Berezovsky. Of course, her side of the story received no coverage in the British media.

Liza Berezovsky believes that her father’s death in 2013, while living in exile in Britain, was the dirty work of British state assassins. The case has added importance because it links directly to the previous death of Alexander Litvinenko, who was also living as an exile in Britain.

Berezovsky’s daughter believes that her father wanted to return from Britain to Russia so that he could live out his old age in his native country. She claims that the oligarch had vital information on how the death of Litvinenko in 2006, reportedly from radioactive polonium poisoning, had actually been staged as a smear against Putin and the Kremlin.

Boris Berezovsky, his daughter claims, played a key role along with the British state in orchestrating the demise of Litvinenko to look like an assassination plot carried out by the Kremlin. It was Berezovsky who apparently suggested that Litvinenko, with whom he was an associate, shave off his hair in order to drum up the suspicion of Kremlin poisoning.

Liza Berezovsky contends that, seven years after Litvinenko died, her father was preparing to divulge the dirty tricks involving the British state and their anti-Russian campaign. She said the oligarch wanted to atone for his past misdeeds and to make his peace with Mother Russia. She believes that British state agents got wind of his plans to come clean, which would have caused them an acute international scandal.

In March 2013, just days before he was due to depart from Britain, the oligarch was found dead in his mansion near Ascot, in the English countryside, apparently from suicide caused by a ligature around his neck.

In the end, however, a British civil coroner did not conclude suicide, and left an “open verdict” on the death. An eminent German pathologist hired by Liza Berezovsky provided post-mortem evidence that her father’s body showed signs of his death having not been self-inflicted. He was, in their view, murdered.

It is not beyond the realms of possibility that British secret services are running an assassination program on Russian exiles. These exiles are often used for a time by the British state as media assets, presented as high-profile critics of the Kremlin and lending testimonies to much-publicized allegations of “authoritarianism” and “human rights abuses” under Putin.

At some opportune later time, these Russian dissidents can be liquidated by British agents. Their deaths are then presented as “more proof” of Russian malign activity and in particular for the purpose of criminalizing President Putin and his government.

Considering how London has become an international haven for Russian oligarchs whose wealth is often tainted as being proceeds from criminal activity against Russian laws and who therefore are easily framed as Putin opponents – the British state has ample opportunities for setting up “assassinations” and anti-Putin provocations.

Such a nefarious British program is by no means unprecedented. During the 30-year armed conflict in Northern Ireland ending in the late 1990s, it is documented that the British state ran clandestine assassination campaigns against Irish republican figures, as well as ordinary citizens, as a coldly calculated political instrument of state-sponsored terrorism. It was an instrument honed by the British from other colonial-era conflicts, such as in Kenya, Myanmar (formerly Burma), Malaysia (formerly Malaya), and in several Arab countries like Bahrain and Yemen, as detailed by British historian Mark Curtis in his book Web of Deceit.

Adapting such heinous techniques for a contemporary propaganda war against Russia wouldn’t cost any qualms to British state grandees and their agents. Indeed, for them, it would be simply Machiavellian business-as-usual. 

Published:7/23/2018 2:42:55 AM
[Markets] Turkey: Exposing Crimes Of ISIS Is Terrorism

Authored by Uzay Bulut via The Gatestone Institute,

How does Turkish president Recep Tayyip Erdogan fight his political opponents, including those who have been working hard to expose the atrocities of the Islamic state terror group, ISIS? By throwing them into jail for allegedly "supporting terrorism."

Since the 2016 botched coup attempt in Turkey, Erdogan has been waging a massive crackdown on his opponents and critics, including politicians, political activists, journalists and members of the Turkish security forces and army.

The latest victim of this crackdown is Eren Erdem, a former deputy of the main opposition Republican People's Party (CHP), who is known for his activities to expose the crimes of ISIS and other terrorist groups.

Erdem was recently detained on charges of "aiding a terrorist organization" and is also being investigated for "insulting the Turkish state." He faces a prison sentence of 9 to 22 years on charges of "knowingly and willingly aiding an armed terrorist organization as a non-member", "revealing the identity of an anonymous witness" and "violating the confidentiality of the investigation."

The author of nine books, Erdem worked as a journalist before being elected as a CHP member of parliament for Istanbul in 2015. He appears to be the bravest MP who has exposed ISIS activities across Turkey during his tenure and has often urged the ruling Justice and Development Party (AKP) government to stop these activities and bring the perpetrators to account.

Erdem meticulously cited evidence from criminal cases, indictments and investigations by state authorities as well as news reports in his statements and parliamentary motions. On December 10, 2015, for example, Erdem made a speech in Turkey's parliament about ISIS activities in Turkey. These included ISIS's transfer of the ingredients of sarin gas through Turkey to Syria "with which thousands of children were murdered in the Middle East". Referring to the investigation and indictment by the Adana office of a public prosecutor, he said:

"Some people in Turkey have contacted the members of the ISIS terrorist organization and transferred the raw material of sarin gas, which is a chemical weapon, to Syria. The prosecutor started an investigation on this. The suspects who carried out the transfer were arrested and jailed. Upon the order of the prosecutor, the telephones of all suspects were wiretapped, the details of which are in this indictment... But within a week, the case was closed, the suspects were released and allowed to leave Turkey to cross the border to Syria."

Because of the statements he made in parliament, Erdem became the target of a smear campaign, particularly after he spoke to the international press. In December 2015, for example, he told RT: "Chemical weapon materials were brought to Turkey and put together in ISIS camps in Syria, which was known as the Iraqi Al-Qaeda at that time."

Erdogan, condemning Erdem for the RT interview, said that Erdem "has sunk in the pit of treason" and called on the CHP to dismiss him: "Shame on his party, me and my nation for letting him stay in his party." A investigation into treason was then launched against Erdem.

Erdem then stated that after the publication of the interview, he received death threats over social media, with his home address posted by pro-government Twitter users presumably to enable an attack on his house:

"I just shared the contents of the indictment with the people... I provided them with a document... [The government] is carrying out a lynching campaign against me. Because they are disturbed by me. I have exposed their filths and exploitation of religion in my books... I have received more than a thousand death threats. My email address is filed with death threats... If something happens to me, the pro-government media and AKP deputies are responsible."

Undeterred by the pressure and threats, Erdem has continued exposing and speaking about the activities of jihadist terror groups in the region. During a speech at Turkey's parliament in June 2016, for instance, Erdem once again criticized the government for turning a blind eye to ISIS activities: "ISIS has sleeper cells in Turkey. These cell houses are monitored [by state authorities]... The information gained from technical surveillance on these cells has confirmed that ISIS is organized in Turkey."

The primary suspect of ISIS's terror attack in Ankara, Erdem said, who goes by acronym I.B. [Ibrahim Bali] "sent 1,800 terrorists to ISIS, all of whom were monitored through technical surveillance but not a single police or military operation was carried out on them... Where are the police forces? I identified 10.000 addresses [of ISIS members] in these documents of investigations conducted by prosecutors and judges.... Why are these men not in jail?"

Erdem also commented on the Turkish language online magazine published by ISIS, Konstantiniyye:

"ISIS sends these magazines to bookstores and its cell houses. The government knows this. But no police or military operation has been carried out on anywhere including the printing house of this magazine."

Erdem then showed a photo of the "database" interface ISIS created of its injured and treated members and said that many ISIS terrorists received medical treatment in Turkey. He also called on the parliament to open a commission to investigate ISIS activities in Turkey, but the call was rejected by the votes of the ruling AKP party. A day later, at a press conference at Turkey's parliament, Erdem said:

"If the commission we proposed were established, we would crush all of the ISIS cells across in Turkey in a few months. There would be no cell left. Because we know the addresses of these cells. We learn them from the police... We also learn from the investigation by police that ISIS members get organized in Istanbul through a magazine called 'the Islamic World'. But there has been no police operation against them. This is not neglect. This is cooperation [with ISIS]."

Erdem also said that he received threats and curses on social media after he proposed establishing a commission for investigating ISIS. He added that he was provided with security guards by the governor as a precaution to death threats.

Eren Erdem at a June 2016 press conference. (Image source: Eren Erdem video screenshot)

In May 2018, an Islamist association demanded prosecutors to issue an arrest warrant against Erdem. He responded that he was "being exposed to yet another lynching campaign". He then received a ban on going abroad as he was about to leave Turkey for Germany with his family on May 21. He was stopped at the Istanbul airport by authorities and his passport was seized.

When Erdem's party, the CHP, failed to nominate him as MP candidate for June 24 elections, he lost his parliamentary seat and his immunity. On June 26, he was arrested in Istanbul.

The terror organization to which Erdem's indictment refers is the FETÖ (Fethullahist Terrorist Organization), named after Islamic cleric Fethullah Gülen. It is an organization that Erdogan and other members of the Turkish government accuse of staging a 2016 attempted coup, and often use as an excuse to arrest its critics.

A lawsuit was filed against Erdem due to his works at newspaper Karsi, where Erdem was the editor-in-chief. The accusation that he is a "FETÖ supporter" is particularly baseless given that in 2016, he published a book entitled "Nurjuvazi" that criticized Gülen and his movement.

In the meantime, a former CHP deputy announced on July 3 that CHP MPs who wanted to visit Erdem in prison were not given permission by authorities. "This," he wrote on Twitter, "is isolation against Erdem."

Another investigation was recently opened against him that is looking into his criticism against the Free Syrian Army (FSA) for allegedly violating Article 301 of the penal code, which prescribes prison terms for "denigration of Turkey, the Turkish nation, or Turkish government institutions."

In an Orwellian nightmare, a former deputy and a journalist who has so courageously dedicated his career to exposing and condemning terrorist organizations, is now being accused of "aiding terrorists". The real terrorists he has condemned, however, remain free.

Erdem is paying the price for telling the truth in Turkey. He has risked his life to stop ISIS and help save lives. Now is the time for human rights activists and the media to defend him.

Published:7/23/2018 1:29:47 AM
[British Intelligence] British Intelligence Is Taking Advice From a Kid’s Book Series—That’s a Bad Idea The Alex Rider books are great, but they shouldn't influence government policy. Published:7/21/2018 11:47:42 PM
[Startups] Comic sales are down as readers abandon print Comic book and graphic novel sales fell 6.5% in 2017 from a 2016 high of $1.015 billion. Graphic novels brought in $570 million while comic books brought in about $350 million. A report posted to Comichron notes that comic stores are still the biggest source for revenue while $90 million is attributable to digital downloads. […] Published:7/18/2018 2:11:43 PM
[Markets] Lunatic Politics (Part 1) - Russiagate Is A Religion

Authored by Michael Krieger via Liberty Blitzkrieg blog,

As the Snowden documents and David Sanger’s great new book and other books make plain, and as U.S. officials are wont to brag, the U.S. intelligence services break into computers and computer networks abroad at an astounding rate, certainly on a greater scale than any other intelligence service in the world.  Every one of these intrusions in another country violates that country’s criminal laws prohibiting unauthorized computer access and damage, no less than the Russian violations of U.S. laws outlined in Mueller’s indictment...

It is no response to say that the United States doesn’t meddle in foreign elections, because it has in the past - at least as recently as Bill Clinton’s intervention in the Russian presidential election of 1996 and possibly as recently as the Hillary Clinton State Department’s alleged intervention in Russia’s 2011 legislative elections.

And during the Cold War the United States intervened in numerous foreign elections, more than twice as often as the Soviet Union.

Intelligence history expert Loch Johnson told Scott Shane that the 2016 Russia electoral interference is “the cyber-age version of standard United States practice for decades, whenever American officials were worried about a foreign vote.” 

The CIA’s former chief of Russia operations, Steven L. Hall, told Shane: “If you ask an intelligence officer, did the Russians break the rules or do something bizarre, the answer is no, not at all.” Hall added that “the United States ‘absolutely’ has carried out such election influence operations historically, and I hope we keep doing it.”

LawfareUncomfortable Questions in the Wake of Russia Indictment 2.0 and Trump’s Press Conference With Putin

Nothing gets the phony “Resistance,” corporate media and neocons more hysterical than when Trump isn’t belligerent enough while meeting with foreign leaders abroad. While the pearl clutching was intense during the North Korea summit, the reoccurring, systematic outrage spectacle was taken to entirely new levels of stupidity and hyperbole during yesterday’s meeting with Putin in Finland.

The clown parade really got going after compulsive liar and former head of the CIA under Barack Obama, John Brennan, accused Trump of treason on Twitter — which resistance drones dutifully retweeted, liked and permanently enshrined within the gospel of Russiagate.

Some people hate Trump so intensely they’re willing to take the word of a professional liar and manipulator as scripture.

In fact, Brennan is so uniquely skilled at the dark art of deception, Trevor Timm, executive direction of the Freedom of the Press foundation described him in the following manner in a must read 2014 article

“this is the type of spy who apologizes even though he’s not sorry, who lies because he doesn’t like to tell the truth.” The article also refers to him as “the most talented liar in Washington.” 

This is the sort of hero the phony “resistance” is rallying around. No thank you.

It wasn’t just Brennan, of course. The mental disorder colloquially known as Trump Derangement Syndrome is widely distributed throughout society at this point. Baseless accusations of treason were thrown around casually by all sorts of TDS sufferers, including sitting members of Congress. To see the extent of the disease, take a look at the show put on by Democratic Congressman from Washington state, Rep. Adam Smith.

Via The Hill:

“At every turn of his trip to Europe, President Trump has followed a script that parallels Moscow’s plan to weaken and divide America’s allies and partners and undermine democratic values. There is an extensive factual record suggesting that President Trump’s campaign and the Russians conspired to influence our election for President Trump,” Smith, a top Democrat on the House Armed Services Committee, said in an official statement.

“Now Trump is trying to cover it up. There is no sugar coating this. It is hard to see President Trump siding with Vladimir Putin over our own intelligence community and our criminal investigators as anything other than treason.”

Those are some serious accusations. He must surely have a strong argument to support such proclamations, right? Wrong. Turns out it was all show, pure politics.

In an interview with The Seattle Times, Smith expanded on his “treason” comment, saying Trump legally did not commit treason but has committed other impeachable offenses. 

“Treason might have been a little bit of hyperbole,” Smith told The Seattle Times. “There is no question in my mind that the United States has the need to begin an impeachment investigation.”

It says a lot that the resistance itself doesn’t even believe its own nonsense. They’re just using hyperbolic and dangerous language to make people crazy and feed more TDS.

Here’s yet another example of a wild-eyed Democratic Congressman sounding utterly bloodthirsty and unhinged. Rep. Steve Cohen of Tennessee is openly saying the U.S. is at war with Russia.

From The Hill:

“No question about it,” Cohen told Hill.TV’s Buck Sexton and Krystal Ball on “Rising” when asked whether the Russian hacking and propaganda effort constituted an act of war.

“It was a foreign interference with our basic Democratic values. The underpinnings of Democratic society is elections, and free elections, and they invaded our country,” he continued. 

Cohen went on to say that the U.S. should have countered with a cyber attack on Russia. 

“A cyber attack that made Russian society valueless. They could have gone into Russian banks, Russian government. Our cyber abilities are such that we could have attacked them with a cyber attack that would have crippled Russia,” he said. 

This is a very sick individual.

While the above is incredibly twisted, it’s become increasingly clear that Russiagate has become something akin to a religion. It’s adherents have become so attached to the story that Trump’s “wholly in the pocket of Putin,” they’re increasingly lobbing serious and baseless accusations against people who fail to acquiesce to their dogma.

I was a victim of this back in November 2016 when I was falsely slandered in The Washington Post’s ludicrous and now infamous PropOrNot article.

More recently, we’ve seen MSNBC pundit Malcom Nance (ex-military/intelligence) call Glenn Greenwald a Russian agent (without evidence of course), followed by “journalist” David Corn calling Rand Paul a “traitor” for stating indisputable facts.

Calling someone a traitor for stating obvious facts that threaten the hysteria you’re trying to cultivate is a prime example of how this whole thing has turned into some creepy D.C. establishment religion. If these people have such a solid case and the facts are on their side, there’s no need to resort to such demented craziness. It does nothing other than promote societal insanity and push the unconvinced away.

It’s because of stuff like this that we’re no longer able to have a real conversation about anything in this country (many Trump cheerleaders employ the same tactics) . This is a deadly thing for any society and will be explored in Part 2.

*  *  *

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Published:7/18/2018 7:12:36 AM
[World] BOOK REVIEW: 'The Tragedy of Benedict Arnold' by Joyce Lee Malcolm


By Joyce Lee Malcolm

Pegasus Books $27.95, 410 pages


By Stephen Brumwell

Yale University Press $30,372 pages

For generations, the words "Benedict Arnold" have elicited scorn for the man whose treachery almost scuttled ... Published:7/16/2018 8:22:35 PM

[US News] BAHAHAHA! James Woods DROPS Maxine Waters for claiming Trump is jealous of Obama and OMG LOL

Maxine Waters thinks Trump is jealous of Obama. Alrighty then, Crazy Auntie Maxine. Whatever helps you sleep better at night. Well, yes, the #CashForClunkers achievement was one for the record books and greatly to be envied. What else? — James Woods (@RealJamesWoods) July 16, 2018 And James Woods is right on the money … […]

The post BAHAHAHA! James Woods DROPS Maxine Waters for claiming Trump is jealous of Obama and OMG LOL appeared first on

Published:7/16/2018 2:53:47 PM
[Books] Spymaster (John Hinderaker) You may be familiar with Brad Thor, the thriller writer. He is good, and extremely popular. Like all authors of thriller series, you can begin with the fact that it ain’t Shakespeare. But Thor is one of the masters of the craft. Thor’s latest book, out last week, is Spymaster, the 18th in Thor’s Scot Harvath series. Harvath is a counterterrorist operative and pretty much a superhero. Most books in Published:7/14/2018 1:58:31 AM
[Markets] Oil's Perfect Storm Lays At Trump's Feet

Authored by Tim Daiss via,

It’s becoming painfully clear that the way forward for global oil markets is going to be bumpy, very bumpy, particularly as we head into next year. Much of this uncertainty, even blame, is being increasingly leveled at a person that has surprised, flabbergasted and even shocked political opponents, allies and adversaries alike since he took office - President Donald Trump.

A growing line of thought surmises that while Trump uses the presidential bully pulpit, in this case Twitter, to put pressure on long-time ally and de facto OPEC leader Saudi Arabia to get ready to pump more oil to keep (both oil and gas) prices from spiraling out of control, much of the blame for higher prices actually belong to Trump.

The argument makes perfect sense.

If Trump would ease back on both his heated rhetoric toward Iran, though that case could be made over much of Trump’s dealings with China, the EU, Canada and others, and if Trump would revisit his decision on re-imposing sanctions on Iran, then oil markets would benefit.

Why? A softer line on Iran would reduce the worry or even fear that a loss of some 2.7 million barrels per day (bpd) of Iranian crude would roil oil markets so much that the Saudis would have to pump an unprecedented amount of oil, perhaps as much as 12.5 million bpd, eating up all of its spare capacity.

The Saudi’s have never pumped more than around 10.7 million bpd of oil, a level reached in June, and has for more than 50 years kept at least 1.5-2 million bpd of spare capacity for oil market management.

Under such a worst-case scenario, global oil markets would be dangerously exposed to any oil demand/consumption increases as well as geopolitical developments that always take aim at global oil markets. A recent Bloomberg article articulated the problem well. It said that “the simple truth is that there isn’t enough spare capacity in the world to replace the complete loss of Iranian exports.”

“Saudi Arabia can boost output to 11.5 million bpd immediately,” the report added, citing a 2016 interview with Saudi Crown Price Mohammed bin Salman. It can also go to 12.5 million in six to nine months, Bloomberg added, but the prince has said nothing since then to suggest the figures have changed.

Trump’s thinking called into question

However, all of this seems to be lost on Trump. With mid-term November elections approaching and decisive House and Senate seats in contention, much of the second half of the president’s term could be jeopardized if higher gas prices (amid higher oil prices) eat into voters’ pocket books and they take their frustration out at the polls. Trump’s only plan appears to put undue, perhaps geopolitically damaging pressure on the Saudis to make up for anticipated lost barrels when the Saudis likely can’t do it alone.

It’s also apparent that Trump has taken an emboldened stance with the Saudis since its Riyadh who was instrumental in Trump’s decision to re-impose Iranian sanctions.

With oil production problems persisting in Libya and in Venezuela and with those problems likely to carry into the fall election season and beyond, Trump is playing a dangerous game and could find his back against the wall. Voter angst in November would also spill over into the upcoming 2020 presidential election season. Consequently, the often-used campaign slogan of presidential incumbents, “Re-elect the President” may fall on deaf ears.

Two weeks ago, Hootan Yazhari, head of frontier markets equity research at Bank of America Merrill Lynch, said Trump’s push to disrupt Iranian oil production could cause oil prices to hit $90 per barrel by the end of the second quarter of next year. Others have forecasted even higher prices, breaching the $100 plus per barrel price point.

The only option, alluded to at the top of this piece, would be for Trump to re-engage with America’s European allies over Iranian nuclear development and other concerns. This would tone down oil market worries and perhaps even open the door for re-negotiation with both the EU and in time Tehran - in essence, cooler heads and diplomacy would prevail. However, there is little chance that the president would, or even could at this point, change his mind without losing immense political face. Something, thus far, he has been unwilling to do.

Published:7/12/2018 9:14:00 AM
[Books] Walking with Destiny: A preview (Scott Johnson) The news is so painfully stupid that I have gone in search of relief. It occurred to me yesterday that the prominent historian Andrew Roberts has a biography of Winston Churchill forthcoming this fall. I thought to look up the publication date — Roberts’s Churchill: Walking with Destiny will be published by Penguin Books on November 9. Looking for the publication date, I also found that Penguin had just posted Published:7/11/2018 6:51:15 AM
[Entertainment] ‘Dude, SEEK HELP’! Joss Whedon’s FREAKOUT over #Kavanaugh SCOTUS is one for the books

OMG WE’RE ALL GONNA DIE BECAUSE TRUMP PICKED ANOTHER SCOTUS JUSTICE. Oops, sorry ’bout all of those CAPS … we’re trying so hard to connect with our delicate, fragile, and quite frankly overly emotional ‘friends’ on the Left who seem to think everything this president does will be the end the world as we know […]

The post ‘Dude, SEEK HELP’! Joss Whedon’s FREAKOUT over #Kavanaugh SCOTUS is one for the books appeared first on

Published:7/10/2018 2:46:27 PM
[Media] Peak 2018: BuzzFeed found a real ‘Professor Snape’ whose nickname for Brett Kavanaugh is ‘Lord Voldemort’

One of the things we as conservatives constantly make fun of is the Left’s reliance on the Harry Potter books for comparisons to Donald Trump. For example, Jimmy Kimmel already joked that Trump nominated “Lord Voldemort” for SCOUTS: Jimmy Kimmel Can't Believe Trump Nominated Lord Voldemort to the Supreme Court (Video) — TheWrap […]

The post Peak 2018: BuzzFeed found a real ‘Professor Snape’ whose nickname for Brett Kavanaugh is ‘Lord Voldemort’ appeared first on

Published:7/10/2018 11:16:44 AM
[Markets] Polish Politician Warns Of Europe's "Degenerate Liberalism"

Authored by Tunku Varadarajan, originally published op-ed at The Wall Street Journal,

As the North Atlantic Treaty Organization prepares for its annual summit this week, there is much talk about tensions between Europe and Donald Trump’s United States. But just as the American public is divided over Mr. Trump, Europe has its own deep fissures. The most prominent example is Brexit, Britain’s vote, months before Mr. Trump’s election, to leave the European Union. A close second may be the EU’s clash with Poland, its largest Eastern European member.

One reason Poland infuriates the EU, according to Ryszard Legutko, is Warsaw’s unswerving pro-Americanism. After Brexit, Poland will be “the most Atlanticist country in the EU,” says Mr. Legutko, a professor of ancient philosophy who also represents Poland’s conservative governing party at the European Parliament.

“That’s why we have the notion of strengthening the eastern flank of NATO with American troops,” he tells me in an interview at the Polish Consulate in Manhattan. “I do not think that a substantial reduction of the U.S. military presence in Germany will happen soon, but one cannot exclude such a possibility, once we remember how quick President Trump can be in taking decisions.”

If Mr. Trump is a harsh critic of American elites, Mr. Legutko plays that role, albeit with a less demotic style, in the European context. In his 2016 book, “The Demon in Democracy: Totalitarian Temptations in Free Societies,” he writes:

“The European Union reflects the order and the spirit of liberal democracy in its most degenerate version.”

That, he tells me, is why the EU “doesn’t merely have individual dissidents in its midst, but also dissident states.”

The prevailing EU attitude “not only toward Trump, but also toward Hungary, Poland, Italy and other dissident governments,” he says, is that they are “accidents, unnatural deviations, that could and will be quickly corrected.”

In the Polish case, Brussels is attempting to apply some muscle toward that end. Poland’s governing Law and Justice Party enacted a law, which took effect this week, imposing a retirement age of 65 on the country’s Supreme Court judges. The aim was to force out some long-sitting liberal jurists and replace them with more-conservative ones. Brussels accuses Poland of violating the EU treaty and is threatening to suspend the country’s voting rights in the union.

“More than 80% of Poles want the legal system to be reformed,” Mr. Legutko says indignantly. “They have had a very bad experience with the courts.” In the Polish Supreme Court—“a body of 100 judges, so with nothing in common with the U.S. Supreme Court”—there are “still members who faithfully and shamelessly served the communist regime in the past.” After communism’s fall in 1989, he says, there were “only 48 cases of judges being charged with collaborating with the communist regime by legalizing its political repression.” In 42 of these cases, the disciplinary courts refused to start legal proceedings. “In five cases, the judges were acquitted. Only one judge was found guilty.”

The Polish government insists its actions are a necessary debridement of the judiciary’s rotten corpus. The EU disagrees, Mr. Legutko says, because “it is liberalism incarnate.” In his book, he writes that “Poland shook off the communist yoke at a time when the Western world had already reached a phase of considerable homogeneity and standardization.” The smart set in Brussels finds the Poles irritating, he tells me, because they want Poland to be “indistinguishable from other EU nations.” An “exotic Poland” that pursues its own political course is unacceptable.

The EU’s elites, Mr. Legutko says, are unbending in their belief that “one has to be liberal in order to be respectable, that whoever is not a liberal is either stupid or dangerous, or both.”

Seconds later, he corrects himself: “I mean the elites of the West, including those of the United States. Being liberal is the litmus test of political decency. This is today’s orthodoxy. If you criticize it, or you’re against it, you’re disqualified.” The world has “shrunk,” Mr. Legutko laments, “and the liberal paradigm seems to be omnipresent.”

What is that paradigm?

“A liberal is somebody who will come up to you and tell you, ‘I will organize your life for you. I will tell you what kind of liberty you will have. And then you can do whatever you like.’ ”

His response—and Poland’s as a sovereign entity—is unequivocal:

“Don’t organize my liberty for me. Do not try to create a blueprint according to which an entire society must function.”

That’s why, he says, Poland is “a dissident member of the EU, and the primary reason why it has been attacked so much. Not because we did something outrageous, but because of who we refuse to be.”

Hungary, under Viktor Orbán, is also an EU dissident. It was, Mr. Legutko says, “the first to be attacked by the elites because of Prime Minister Orbán’s rejection of liberal ways.” But he thinks Brussels sees Poland as a bigger threat:

“Hungary is a small country. Poland is not. The criticism is severe because we are more important, in a way.” What goes down particularly badly with the conservative government in Warsaw is the “condescension” of France and Germany:

“They say to Poland, ‘Why are you making so much noise? Why are you doing all of this? You were part of the club before. You received all sorts of benefits. Isn’t what you got enough?’ ”

No, Mr. Legutko answers. All these “benefits”—such as the elevation of former Polish Prime Minister Donald Tusk to the presidency of the “toothless” European Council—mask the disproportionate division of power within the EU. Equality of member states exists only on paper: “The big players use the European institutions to serve their own interests, and the political architecture condemns everyone else to subordinate status.” He says this could become “unbearable” for Poland, especially after Britain’s departure.

You might think Mr. Legutko would sympathize with Brexit, but he regards it as a nightmare. “It was very bad for Poland, and very bad for the EU, because Britain had been a country of common sense.” He describes the response of European leaders: “First, they started by insulting the Brits—they were fooled, they were duped, they were illiterate. The old senile Brits and the uneducated young were those who voted to leave, and those who were intelligent voted to remain.” That reaction, he says, is “typical. You cannot behave differently from us without being a fool.” For an American, the word “deplorable” comes to mind.

Could there someday be a Polish exit from the EU? No, Mr. Legutko says emphatically. “We will probably be the last to leave the EU. We will switch off the lights.” The Poles overwhelmingly favor the union but are concerned about its direction: “Polish history has been very turbulent, as you know. We lost our independence for a long time. So even as we join the world, we are very watchful of our sovereignty, very sensitive about it.”

That watchfulness can shade into hypersensitivity.

An obvious example is the law passed recently criminalizing speech that imputes to Poland complicity in the Holocaust. Mr. Legutko prickles when I ask about the law, taking care to point out that he’s “not extremely enthusiastic about it.” But he says it is a “reaction to the widespread use of the phrase ‘Polish concentration camps’ and ‘Polish death camps’ in the media. We did not establish them. We did not control them. There were concentration camps in France, but nobody calls them ‘French concentration camps.’ ” Mr. Legutko says that he, like many Poles, “agrees with this antidefamation law’s intention and sees nothing objectionable with its text,” but he does concede that it is likely to prove “counterproductive.”

It irks Mr. Legutko that many of the countries that criticize Poland for its Holocaust law have their own legal curbs on speech. That inconsistency appears to reinforce his weariness with the West. “Under the old communist regime, the West was considered an alternative to communism. It was a hope, a place in which one could find refuge from an oppressive and stifling ideology.” Such refuge could be temporary, for “a student who obtained a scholarship in France or Britain,” or permanent, for one who defected. But for those who stayed in Poland, “even watching American or British movies, reading books, or listening to the radio was like a breath of fresh air.”

Mr. Legutko says that “this feeling that there is a different world, unlike the one I live in, is disappearing because of the homogenization of Western culture.” The results are depressing. “Wherever one goes, from Germany to New Zealand, one finds oneself in the power of the same liberal ideology, the same jargon.” Dissenters, he says, are few and marginalized. An incorrect utterance can lead to swift, career-ending reprisals.

Paradoxically, in Mr. Legutko’s view, one now finds greater diversity and freedom of thought in some of the former communist countries, including Poland: “Political correctness is less oppressive, and there are influential nonliberal ideas. The fact that the Catholic Church is strong in Poland makes a difference, because it gives us a mental and spiritual access to ideas and sensibilities that have evaporated in the secular West.

“We often say, half-jokingly and half-seriously, that now Poland may become a country to which people will defect”—people “from France, the Netherlands or Britain.”

Published:7/10/2018 2:43:02 AM
[Markets] The Most Intolerant Wins: Nassim Taleb Exposes The Dictatorship Of The Small Minority

Authored by Nassim Nicholas Taleb via,

(Chapter from Skin in the Game)

How Europe will eat Halal?... ?Why you don’t have to smoke in the smoking section?... ?Your food choices on the fall of the Saudi king... How to prevent a friend from working too hard... Omar Sharif ‘s conversion?... ?How to make a market collapse

The best example I know that gives insights into the functioning of a complex system is with the following situation. It suffices for an intransigent minority –a certain type of intransigent minorities –to reach a minutely small level, say three or four percent of the total population, for the entire population to have to submit to their preferences. Further, an optical illusion comes with the dominance of the minority: a naive observer would be under the impression that the choices and preferences are those of the majority. If it seems absurd, it is because our scientific intuitions aren’t calibrated for that (fughedabout scientific and academic intuitions and snap judgments; they don’t work and your standard intellectualization fails with complex systems, though not your grandmothers’ wisdom).

The main idea behind complex systems is that the ensemble behaves in way not predicted by the components. The interactions matter more than the nature of the units. Studying individual ants will never (one can safely say never for most such situations), never give us an idea on how the ant colony operates. For that, one needs to understand an ant colony as an ant colony, no less, no more, not a collection of ants. This is called an “emergent” property of the whole, by which parts and whole differ because what matters is the interactions between such parts. And interactions can obey very simple rules. The rule we discuss in this chapter is the minority rule.

The minority rule will show us how it all it takes is a small number of intolerant virtuous people with skin in the game, in the form of courage, for society to function properly.

This example of complexity hit me, ironically, as I was attending the New England Complex Systems institute summer barbecue. As the hosts were setting up the table and unpacking the drinks, a friend who was observant and only ate Kosher dropped by to say hello. I offered him a glass of that type of yellow sugared water with citric acid people sometimes call lemonade, almost certain that he would reject it owing to his dietary laws. He didn’t. He drank the liquid called lemonade, and another Kosher person commented: “liquids around here are Kosher”. We looked at the carton container. There was a fine print: a tiny symbol, a U inside a circle, indicating that it was Kosher. The symbol will be detected by those who need to know and look for the minuscule print. As to others, like myself, I had been speaking prose all these years without knowing, drinking Kosher liquids without knowing they were Kosher liquids.

Figure 1 The lemonade container with the circled U indicating it is (literally) Kosher.

Criminals With Peanut Allergies

A strange idea hit me. The Kosher population represents less than three tenth of a percent of the residents of the United States. Yet, it appears that almost all drinks are Kosher. Why? Simply because going full Kosher allows the producer, grocer, restaurant, to not have to distinguish between Kosher and nonkosher for liquids, with special markers, separate aisles, separate inventories, different stocking sub-facilities. And the simple rule that changes the total is as follows:

A Kosher (or halal) eater will never eat nonkosher (or nonhalal) food , but a nonkosher eater isn’t banned from eating kosher.

Or, rephrased in another domain:

A disabled person will not use the regular bathroom but a nondisabled person will use the bathroom for disabled people.

Granted, sometimes, in practice, we hesitate to use the bathroom with the disabled sign on it owing to some confusion –mistaking the rule for the one for parking cars, under the belief that the bathroom is reserved for exclusive use by the handicapped.

Someone with a peanut allergy will not eat products that touch peanuts but a person without such allergy can eat items without peanut traces in them.

Which explains why it is so hard to find peanuts on airplanes and why schools are peanut-free (which, in a way, increases the number of persons with peanut allergies as reduced exposure is one of the causes behind such allergies).

Let us apply the rule to domains where it can get entertaining:

An honest person will never commit criminal acts but a criminal will readily engage in legal acts.

Let us call such minority an intransigent group, and the majority a flexible one. And the rule is an asymmetry in choices.

I once pulled a prank on a friend. Years ago when Big Tobacco were hiding and repressing the evidence of harm from secondary smoking, New York had smoking and nonsmoking sections in restaurants (even airplanes had, absurdly, a smoking section). I once went to lunch with a friend visiting from Europe: the restaurant only had availability in the smoking sections. I convinced the friend that we needed to buy cigarettes as we had to smoke in the smoking section. He complied.

Two more things.

First, the geography of the terrain, that is, the spatial structure, matters a bit; it makes a big difference whether the intransigents are in their own district or are mixed with the rest of the population. If the people following the minority rule lived in Ghettos, with their separate small economy, then the minority rule would not apply. But, when a population has an even spatial distribution, say the ratio of such a minority in a neighborhood is the same as that in the village, that in the village is the same as in the county, that in the county is the same as that in state, and that in the sate is the same as nationwide, then the (flexible) majority will have to submit to the minority rule.

Second, the cost structure matters quite a bit. It happens in our first example that making lemonade compliant with Kosher laws doesn’t change the price by much, not enough to justify inventories. But if the manufacturing of Kosher lemonade cost substantially more, then the rule will be weakened in some nonlinear proportion to the difference in costs. If it cost ten times as much to make Kosher food, then the minority rule will not apply, except perhaps in some very rich neighborhoods.

Muslims have Kosher laws so to speak, but these are much narrower and apply only to meat. For Muslim and Jews have near-identical slaughter rules (all Kosher is halal for most Sunni Muslims, or was so in past centuries, but the reverse is not true). Note that these slaughter rules are skin-in-the-game driven, inherited from the ancient Eastern Mediterranean [discussed in Chapter] Greek and Semitic practice to only worship the gods if one has skin in the game, sacrifice meat to the divinity, and eat what’s left. The Gods do not like cheap signaling.

Now consider this manifestation of the dictatorship of the minority. In the United Kingdom, where the (practicing) Muslim population is only three to four percent, a very high number of the meat we find is halal. Close to seventy percent of lamb imports from New Zealand are halal. Close to ten percent of the chain Subway carry halal-only stores (meaning no pork), in spite of the high costs from the loss of business of nonpork stores. The same holds in South Africa where, with the same proportion of Muslims, a disproportionately higher number of chicken is Halal certified. But in the U.K. and other Christian countries, halal is not neutral enough to reach a high level, as people may rebel against forceful abidance to other’s religious norms. For instance, the 7th Century Christian Arab poet Al-Akhtal made a point to never eat halal meat, in his famous defiant poem boasting his Christianity: “I do not eat sacrificial flesh”. (Al-Akhtal was reflecting the standard Christian reaction from three or four centuries earlier?—?Christians were tortured in pagan times by being forced to eat sacrificial meat, which they found sacrilegious. Many Christian martyrs starved to death.)

One can expect the same rejection of religious norms to take place in the West as the Muslim populations in Europe grows.

So the minority rule may produce a larger share of halal food in the stores than warranted by the proportion of halal eaters in the population, but with a headwind somewhere because some people may have a taboo against Moslem food. But with some non-religious Kashrut rules, so to speak, the share can be expected converge to closer to a hundred percent (or some high number). In the U.S. and Europe, “organic” food companies are selling more and more products precisely because of the minority rule and because ordinary and unlabeled food may be seen by some to contain pesticides, herbicides, and transgenic genetically modified organisms, “GMOs” with, according to them, unknown risks. (What we call GMOs in this context means transgenic food, entailing the transfer of genes from a foreign organism or species). Or it could be for some existential reasons, cautious behavior, or Burkean conservatism –some may not want to venture too far too fast from what their grandparents ate. Labeling something “organic” is a way to say that it contains no transgenic GMOs.

In promoting genetically modified food via all manner of lobbying, purchasing of congressmen, and overt scientific propaganda (with smear campaigns against such persons as yours truly), the big agricultural companies foolishly believed that all they needed was to win the majority. No, you idiots. As I said, your snap “scientific” judgment is too naive in these type of decisions. Consider that transgenic-GMO eaters will eat nonGMOs, but not the reverse. So it may suffice to have a tiny, say no more than five percent of evenly spatially distributed population of non-genetically modified eaters for the entire population to have to eat non-GMO food. How? Say you have a corporate event, a wedding, or a lavish party to celebrate the fall of the Saudi Arabian regime, the bankruptcy of the rent-seeking investment bank Goldman Sachs, or the public reviling of Ray Kotcher, chairman of Ketchum the public relation firm that smears scientists and scientific whistleblowers on behalf of big corporations. Do you need to send a questionnaire asking people if they eat or don’t eat transgenic GMOs and reserve special meals accordingly? No. You just select everything non-GMO, provided the price difference is not consequential. And the price difference appears to be small enough to be negligible as (perishable) food costs in America are largely, about up to eighty or ninety percent, determined by distribution and storage, not the cost at the agricultural level. And as organic food (and designations such as “natural”) is in higher demand, from the minority rule, distribution costs decrease and the minority rule ends up accelerating in its effect.

Big Ag (the large agricultural firms) did not realize that this is the equivalent of entering a game in which one needed to not just win more points than the adversary, but win ninety-seven percent of the total points just to be safe. It is strange, once again, to see Big Ag who spent hundreds of millions of dollars on research cum smear campaigns, with hundreds of these scientists who think of themselves as more intelligent than the rest of the population, miss such an elementary point about asymmetric choices.

Another example: do not think that the spread of automatic shifting cars is necessarily due to the majority of drivers initially preferring automatic; it can just be because those who can drive manual shifts can always drive automatic, but the reciprocal is not true.

The method of analysis employed here is called renormalization group, a powerful apparatus in mathematical physics that allows us to see how things scale up (or down). Let us examine it next –without mathematics.

Renormalization Group

Figure 2 shows four boxes exhibiting what is called fractal self-similarity. Each box contains four smaller boxes. Each one of the four boxes will contain four boxes, and so all the way down, and all the way up until we reach a certain level. There are two colors: yellow for the majority choice, and pink for the minority one.

Assume the smaller unit contains four people, a family of four. One of them is in the intransigent minority and eats only non-GMO food (which includes organic). The color of the box is pink and the others yellow . We “renormalize once” as we move up: the stubborn daughter manages to impose her rule on the four and the unit is now all pink, i.e. will opt for nonGMO. Now, step three, you have the family going to a barbecue party attended by three other families. As they are known to only eat nonGMO, the guests will cook only organic. The local grocery store realizing the neighborhood is only nonGMO switches to nonGMO to simplify life, which impacts the local wholesaler, and the stories continues and “renormalizes”.

By some coincidence, the day before the Boston barbecue, I was flaneuring in New York, and I dropped by the office of a friend I wanted to prevent from working, that is, engage in an activity that when abused, causes the loss of mental clarity, in addition to bad posture and loss of definition in the facial features. The French physicist Serge Galam happened to be visiting and chose the friend’s office to kill time. Galam was first to apply these renormalization techniques to social matters and political science; his name was familiar as he is the author of the main book on the subject, which had then been sitting for months in an unopened Amazon box in my basement. He introduced me to his research and showed me a computer model of elections by which it suffices that some minority exceeds a certain level for its choices to prevail.

So the same illusion exists in political discussions, spread by the political “scientists”: you think that because some extreme right or left wing party has, say, the support of ten percent of the population that their candidate would get ten percent of the votes. No: these baseline voters should be classified as “inflexible” and will always vote for their faction. But some of the flexible voters can also vote for that extreme faction, just as nonKosher people can eat Kosher, and these people are the ones to watch out for as they may swell the numbers of votes for the extreme party. Galam’s models produced a bevy of counterintuitive effects in political science –and his predictions turned out to be way closer to real outcomes than the naive consensus.

The Veto

The fact we saw from the renormalization group the “veto” effect as a person in a group can steer choices. Rory Sutherland suggested that this explains why some fast-food chains, such as McDonald thrive, not because they offer a great product, but because they are not vetoed in a certain socio-economic group –and by a small proportions of people in that group at that. To put it in technical terms, it was a best worse-case divergence from expectations: a lower variance and lower mean.

When there are few choices, McDonald’s appears to be a safe bet. It is also a safe bet in shady places with few regulars where the food variance from expectation can be consequential –I am writing these lines in Milan’s cental train station and as offensive as it can be to a visitor from far away, McDonald’s is one of the few restaurants there. Shockingly, one sees Italians there seeking refuge from a risky meal.

Pizza is the same story: it is commonly accepted food and outside a fancy party nobody will be blamed for ordering it.

Rory wrote to me about the asymmetry beer-wine and the choices made for parties: “Once you have ten percent or more women at a party, you cannot serve only beer. But most men will drink wine. So you only need one set of glasses if you serve only wine? - ?the universal donor, to use the language of blood groups.”

This strategy of the best lower bound might have been played by the Khazars looking to chose between Islam, Judaism, and Christianity. Legend has it that three high ranking delegations (bishops, rabbis and sheikhs) came to make the sales pitch. They asked the Christians: if you were forced to chose between Judaism and Islam, which one would you pick? Judaism, they replied. Then they asked the Muslim: which of the two, Christianity or Judaism. Judaism, the Muslim said. Judaim it was and the tribe converted.

Lingua Franca

If a meeting is taking place in Germany in the Teutonic-looking conference room of a corporation that is sufficiently international or European, and one of the persons in the room doesn’t speak German, the entire meeting will be run in… English, the brand of inelegant English used in corporations across the world. That way they can equally offend their Teuronic ancestors and the English language. It all started with the asymmetric rule that those who are nonnative in English know (bad) English, but the reverse (English speakers knowing other languages) is less likely. French was supposed to be the language of diplomacy as civil servants coming from aristocratic background used it –while their more vulgar compatriots involved in commerce relied on English. In the rivalry between the two languages, English won as commerce grew to dominate modern life; the victory it has nothing to do with the prestige of France or the efforts of their civil servants in promoting their more or less beautiful Latinized and logically spelled language over the orthographically confusing one of trans-Channel meat-pie eaters.

We can thus get some intuition on how the emergence of lingua francalanguages can come from minority rules–and that is a point that is not visible to linguists. Aramaic is a Semitic language which succeeded Canaanite (that is, Phoenician-Hebrew) in the Levant and resembles Arabic; it was the language Jesus Christ spoke. The reason it came to dominate the Levant and Egypt isn’t because of any particular imperial Semitic power or the fact that they have interesting noses. It was the Persians –who speak an Indo-European language –who spread Aramaic, the language of Assyria, Syria, and Babylon. Persians taught Egyptians a language that was not their own. Simply, when the Persians invaded Babylon they found an administration with scribes who could only use Aramaic and didn’t know Persian, so Aramaic became the state language. If your secretary can only take dictation in Aramaic, Aramaic is what you will use. This led to the oddity of Aramaic being used in Mongolia, as records were maintained in the Syriac alphabet (Syriac is the Eastern dialect of Aramaic). And centuries later, the story would repeat itself in reverse, with the Arabs using Greek in their early administration in the seventh and eighth’s centuries. For during the Hellenistic era, Greek replaced Aramaic as the lingua franca in the Levant, and the scribes of Damascus maintained their records in Greek. But it was not the Greeks who spread Greek around the Mediterranean –Alexander (himself not Greek but Macedonian and spoke a different dialect of Greek) did not lead to an immediate deep cultural Hellenization. It was the Romans who accelerated the spreading of Greek, as they used it in their administration across the Eastern empire.

A French Canadian friend from Montreal, Jean-Louis Rheault, commented as follows, bemoaning the loss of language of French Canadians outside narrowly provincial areas. He said: “In Canada, when we say bilingual, it is English speaking and when we say “French speaking” it becomes bilingual.”

Decentralize, Again

Another attribute of decentralization, and one that the “intellectuals” opposing an exit of Britain from the European Union (Brexit ) don’t get. If one needs, say a three pct. threshold in a political unit for the minority rule to take its effect, and on average the stubborn minority represents three pct. of the population, with variations around the average, then some states will be subject to the rule, but not others. If on the other hand we merged all states in one, then the minority rule will prevail all across. This is the reason the U.S.A. works so well as, I have been repeating to everyone who listens, we are a federation, not a republic. To use the language of Antifragile, decentralization is convex to variations.

Genes vs Languages

Looking at genetic data in the Eastern Mediterranean with my collaborator the geneticist Pierre Zalloua, we noticed that both invaders, Turks and Arabs left little genes and in the case of Turkey, the tribes from East and Central Asia brought an entirely new language. Turkey, shockingly, still has the populations of Asia Minor you read about in history books, but with new names. Further, Zalloua and his colleagues have shown that Canaanites from 3700 years ago represent more than nine tenth of the genes of current residents of the state of Lebanon, with only a tiny amount of new genes added, in spite of about every possible army having dropped by for sightseeing and some pillaging. While Turks are Mediterraneans who speak an East Asian language, the French (North of Avignon) are largely of Northern European stock, yet they speak a Mediterranean language.


Genes follow majority rules; languages minority rule

Languages travel; genes less so

This shows us the recent mistake to build racial theories on language, dividing people into “Aryans” and “Semites”, based on linguistic considerations. While the subject was central to the German Nazis, the practice continues today in one form or another, often benign. For the great irony is that Nordic supremacists (“Aryan”), while anti-Semitic, used the classical Greeks to give themselves a pedigree and a link to a glorious civilization, but didn’t realize that the Greeks and their Mediterranean “Semitic” neighbors were actually genetically close to one another. It has been recently shown that both ancient Greeks and Bronze age Levantines share an Anatolian origin. It just happened that the languages diverged.

The One-Way Street of Religions

In the same manner, the spread of Islam in the Near East where Christianity was heavily entrenched (it was born there) can be attributed to two simple asymmetries. The original Islamic rulers weren’t particularly interested in converting Christians as these provided them with tax revenues –the proselytism of Islam did not address those called “people of the book”, i.e. individuals of Abrahamic faith. In fact, my ancestors who survived thirteen centuries under Muslim rule saw advantages in not being Muslim: mostly in the avoidance of military conscription.

The two asymmetric rules were are as follows.

First, if a non Muslim man under the rule of Islam marries a Muslim woman, he needs to convert to Islam –and if either parents of a child happens to be Muslim, the child will be Muslim.

Second, becoming Muslim is irreversible, as apostasy is the heaviest crime under the religion, sanctioned by the death penalty. The famous Egyptian actor Omar Sharif, born Mikhael Demetri Shalhoub, was of Lebanese Christian origins. He converted to Islam to marry a famous Egyptian actress and had to change his name to an Arabic one. He later divorced, but did not revert to the faith of his ancestors.

Under these two asymmetric rules, one can do simple simulations and see how a small Islamic group occupying Christian (Coptic) Egypt can lead, over the centuries, to the Copts becoming a tiny minority. All one needs is a small rate of interfaith marriages. Likewise, one can see how Judaism doesn’t spread and tends to stay in the minority, as the religion has opposite rules: the mother is required to be Jewish, causing interfaith marriages to leave the community. An even stronger asymmetry than that of Judaism explains the depletion in the Near East of three Gnostic faiths: the Druze, the Ezidi, and the Mandeans (Gnostic religions are those with mysteries and knowledge that is typically accessible to only a minority of elders, with the rest of the members in the dark about the details of the faith). Unlike Islam that requires either parents to be Muslim, and Judaism that asks for at least the mother to have the faith, these three religions require both parents to be of the faith, otherwise the person says toodaloo to the community.

Egypt has a flat terrain. The distribution of the population presents homogeneous mixtures there, which permits renormalization (i.e. allows the asymmetric rule to prevail) –we saw earlier in the chapter that for Kosher rules to work, one needed Jews to be somewhat spread out across the country. But in places such as Lebanon, Galilee, and Northern Syria, with mountainous terrain, Christians and other Non Sunni Muslims remained concentrated. Christians not being exposed to Muslims, experienced no intermarriage.

Egypt’s Copts suffered from another problem: the irreversibility of Islamic conversions. Many Copts during Islamic rule converted to Islam when it was merely an administrative procedure, something that helps one land a job or handle a problem that requires Islamic jurisprudence. One do not have to really believe in it since Islam doesn’t conflict markedly with Orthodox Christianity. Little by little a Christian or Jewish family bearing the marrano-style conversion becomes truly converted, as, a couple of generations later, the descendants forget the arrangement of their ancestors.

So all Islam did was out-stubborn Christianity, which itself won thanks to its own stubbornness. For, before Islam, the original spread of Christianity in the Roman empire can be largely seen due to… the blinding intolerance of Christians, their unconditional, aggressive and proselyting recalcitrance. Roman pagans were initially tolerant of Christians, as the tradition was to share gods with other members of the empire. But they wondered why these Nazarenes didn’t want to give and take gods and offer that Jesus fellow to the Roman pantheon in exchange for some other gods. What, our gods aren’t good enough for them? But Christians were intolerant of Roman paganism. The “persecutions” of the Christians had vastly more to do with the intolerance of the Christians for the pantheon and local gods, than the reverse. What we read is history written by the Christian side, not the Greco-Roman one.

We know too little about the Roman side during the rise of Christianity, as hagiographies have dominated the discourse: we have for instance the narrative of the martyr Saint Catherine, who kept converting her jailors until she was beheaded, except that… she may have never existed. There are endless histories of Christian martyrs and saints –but very little about the other side, Pagan heroes. All we have is the bit we know about the reversion to Christianity during the emperor Julian’s apostasy and the writings of his entourage of Syrian-Greek pagans such as Libanius Antiochus. Julian had tried to go back to Ancient Paganism in vain: it was like trying to keep a balloon under water. And it was not because the majority was pagan as historians mistakenly think: it was because the Christian side was too unyielding. Christianity had great minds such as Gregorius of Nazianzen and Basil of Caesaria, but nothing to match the great orator Libanius, not even close. (My heuristic is that the more pagan, the more brilliant one’s mind, and the higher one’s ability to handle nuances and ambiguity. Purely monotheistic religious such as Protestant Christianity, Salafi Islam, or fundamentalist atheism accommodate literalist and mediocre minds that cannot handle ambiguity.)

In fact we can observe in the history of Mediterranean “religions” or, rather, rituals and systems of behavior and belief, a drift dictated by the intolerant, actually bringing the system closer to what we can call a religion. Judaism might have almost lost because of the mother-rule and the confinement to a tribal base, but Christianity ruled, and for the very same reasons, Islam did. Islam? there have been many Islams, the final accretion quite different from the earlier ones. For Islam itself is ending up being taken over (in the Sunni branch) by the purists simply because these were more intolerant than the rest: the Wahhabis, founders of Saudi Arabia, were the ones who destroyed the shrines, and to impose the maximally intolerant rule, in a manner that was later imitated by “ISIS” (the Islamic State of Iraq and Syria/the Levant). Every single accretion of Sunni Islam seems to be there to accommodate the most intolerant of its branches.

Imposing Virtue on Others

This idea of one-sidedness can help us debunk a few more misconceptions. How do books get banned? Certainly not because they offend the average person –most persons are passive and don’t really care, or don’t care enough to request the banning. It looks like, from past episodes, that all it takes is a few (motivated) activists for the banning of some books, or the black-listing of some people. The great philosopher and logician Bertrand Russell lost his job at the City University of New York owing to a letter by an angry –and stubborn –mother who did not wish to have her daughter in the same room as the fellow with dissolute lifestyle and unruly ideas.

The same seems to apply to prohibitions –at least the prohibition of alcohol in the United States which led to interesting Mafia stories.

Let us conjecture that the formation of moral values in society doesn’t come from the evolution of the consensus. No, it is the most intolerant person who imposes virtue on others precisely because of that intolerance. The same can apply to civil rights.

An insight as to how the mechanisms of religion and transmission of morals obey the same renormalization dynamics as dietary laws –and how we can show that morality is more likely to be something enforced by a minority. We saw earlier in the chapter the asymmetry between obeying and breaking rules: a law-abiding (or rule abiding) fellow always follows the rules, but a felon or someone with looser sets of principles will not always break the rules. Likewise we discussed the strong asymmetric effects of the halal dietary laws. Let us merge the two. It turns out that, in classical Arabic, the term halal has one opposite: haram. Violating legal and moral rules –any rule?—?is called haram. It is the exact same interdict that governs food intake and all other human behaviors, like sleeping with the wife of the neighbor, lending with interest (without partaking of downside of the borrower) or killing one’s landlord for pleasure. Haram is haram and is asymmetric.

From that we can see that once a moral rule is established, it would suffice to have a small intransigent minority of geographically distributed followers to dictate the norm in society. The sad news, as we will see in the next chapter, is that one person looking at mankind as an aggregate may mistakenly believe that humans are spontaneously becoming more moral, better, more gentle, have better breath, when it applies to only a small proportion of mankind.

The Stability of the Minority Rule, A Probabilistic Argument

A probabilistic argument in favor of the minority rule dictating societal values is as follows. Wherever you look across societies and histories, you tend to find the same general moral laws prevailing, with some, but not significant, variations: do not steal (at least not from within the tribe); do not hunt orphans for pleasure; do not gratuitously beat up passers by for training, use instead a boxing bags (unless you are Spartan and even then you can only kill a limited number of helots for training purposes)and similar interdicts. And we can see these rules evolving over time to become more universal, expanding to a broader set, to progressively include slaves, other tribes, other species (animals, economists), etc. And one property of these laws: they are black-and-white, binary, discrete, and allow no shadow. You cannot steal “a little bit” or murder “moderately”. You cannot keep Kosher and eat “just a little bit” of pork on Sunday barbecues.

Now it would be vastly more likely that these values emerged from a minority that the majority. Why? Take the following two theses:

Outcomes are paradoxically more stable under the minority rule?—?the variance of the results is lower and the rule is more likely to be emerge independently across populations.

What emerges from the minority rule is more likely to be be black-and-white.

An example. Consider that an evil person wants to poison the collective by putting some product into soda cans. He has two options. The first is cyanide, which obeys a minority rule: a drop of poison (higher than a small threshold) makes the entire liquid poisonous. The second is a “majority”-style poison; it requires more than half the liquid to be poisonous in order to kill. Now look at the inverse problem, a collection of dead people after a dinner party, and you need to investigate the cause. The local Sherlock Holmes would assert that conditional on the outcome that all people drinking the soda having been killed, the evil man opted for the first not the second option. Simply, the majority rule leads to fluctuations around the average, with a high rate of survival.

The black-and-white character of these societal laws can be explained with the following. Assume that under a certain regime, when you mix white and dark blue in various combinations, you don’t get variations of light blue, but dark blue. Such a regime is vastly more likely to produce dark blue than another rule that allows more shades of blue.

Popper’s Paradox

I was at a large multi-table dinner party, the kind of situation where you have to choose between the vegetarian risotto and the non-vegetarian option when I noticed that my neighbor had his food catered (including silverware) on a tray reminiscent of airplane fare. The dishes were sealed with aluminum foil. He was evidently ultra-Kosher. It did not bother him to be seated with prosciutto eaters who, in addition, mix butter and meat in the same dishes. He just wanted to be left alone to follow his own preferences.

For Jews and Muslim minorities such as Shiites, Sufis, and associated religions such as Druze and Alawis, the aim is for people to leave them alone so they can satisfy their own dietary preferences –largely, with historical exceptions here and there. But had my neighbor been a Sunni Salafi, he would have required the entire room to be eating Halal. Perhaps the entire building. Perhaps the entire town. Hopefully the entire country. Hopefully the entire planet. Indeed, given the total lack of separation between church and state, and between the holy and the profane (Chapter x), to him Haram (the opposite of Halal) means literally illegal. The entire room was committing a legal violation.

As I am writing these lines, people are disputing whether the freedom of the enlightened West can be undermined by the intrusive policies that would be needed to fight fundamentalists.As I am writing these lines, people are disputing whether the freedom of the enlightened West can be undermined by the intrusive policies that would be needed to fight Salafi fundamentalists.

Clearly can democracy –by definition the majority?—?tolerate enemies? The question is as follows: “ Would you agree to deny the freedom of speech to every political party that has in its charter the banning the freedom of speech?” Let’s go one step further, “Should a society that has elected to be tolerant be intolerant about intolerance?”

This is in fact the incoherence that Kurt Gödel (the grandmaster of logical rigor) detected in the constitution while taking the naturalization exam. Legend has it that Gödel started arguing with the judge and Einstein, who was his witness during the process, saved him.

I wrote about people with logical flaws asking me if one should be “skeptical about skepticism”; I used a similar answer as Popper when was asked if “ one could falsify falsification”.

We can answer these points using the minority rule. Yes, an intolerant minority can control and destroy democracy. Actually, as we saw, it willeventually destroy our world.

So, we need to be more than intolerant with some intolerant minorities. It is not permissible to use “American values” or “Western principles” in treating intolerant Salafism (which denies other peoples’ right to have their own religion). The West is currently in the process of committing suicide.

The Irreverence of Markets and Science

Now consider markets. We can say that markets aren’t the sum of market participants, but price changes reflect the activities of the most motivatedbuyer and seller. Yes, the most motivated rules. Indeed this is something that only traders seem to understand: why a price can drop by ten percent because of a single seller. All you need is a stubborn seller. Markets react in a way that is disproportional to the impetus. The overall stock markets represent currently more than thirty trillions dollars but a single order in 2008, only fifty billion, that is less than two tenth of a percent of the total, caused them to drop by close to ten percent, causing losses of around three trillion. It was an order activated by the Parisian Bank Société Générale who discovered a hidden acquisition by a rogue trader and wanted to reverse the purchase. Why did the market react so disproportionately? Because the order was one-way –stubborn?—?there was desire to sell but no way to change one’s mind. My personal adage is:

The market is like a large movie theatre with a small door.

And the best way to detect a sucker (say the usual finance journalist) is to see if his focus is on the size of the door or on that of the theater. Stampedes happen in cinemas, say when someone shouts “fire”, because those who want to be out do not want to stay in, exactly the same unconditionality we saw with Kosher observance.

Science acts similarly. We will return later with a discussion of how the minority rule is behind Karl Popper’s approach to science. But let us for now discuss the more entertaining Feynman. What do You Care What Other People Think? is the title of a book of anecdotes by the great Richard Feynman, the most irreverent and playful scientist of his day. As reflected in the title of the book, Feynman conveys in it the idea of the fundamental irreverence of science, acting through a similar mechanism as the Kosher asymmetry. How? Science isn’t the sum of what scientists think, but exactly as with markets, a procedure that is highly skewed. Once you debunk something, it is now wrong (that is how science operates but let’s ignore disciplines such as economics and political science that are more like pompous entertainment). Had science operated by majority consensus we would be still stuck in the Middle Ages and Einstein would have ended as he started, a patent clerk with fruitless side hobbies.

*  *  *

Alexander said that it was preferable to have an army of sheep led by a lion to an army of lions led by a sheep. Alexander (or no doubt he who produced this probably apocryphal saying) understood the value of the active, intolerant, and courageous minority. Hannibal terrorized Rome for a decade and a half with a tiny army of mercenaries, winning twenty-two battles against the Romans, battles in which he was outnumbered each time. He was inspired by a version of this maxim. At the battle of Cannae, he remarked to Gisco who complained that the Carthaginians were outnumbered by the Romans: “There is one thing that’s more wonderful than their numbers … in all that vast number there is not one man called Gisgo.

Unus sed leo: only one but a lion.

This large payoff from stubborn courage is not just in the military. The entire growth of society, whether economic or moral, comes from a small number of people. So we close this chapter with a remark about the role of skin in the game in the condition of society. Society doesn’t evolve by consensus, voting, majority, committees, verbose meeting, academic conferences, and polling; only a few people suffice to disproportionately move the needle. All one needs is an asymmetric rule somewhere. And asymmetry is present in about everything.

Published:7/9/2018 12:10:38 AM
[Markets] Is Libertarianism Utopian?

Authored by Duncan Whitmore via The Mises Institute,

Libertarianism – and any political position that leans towards a greater degree of freedom from the state – is opposed both ethically and economically on a number of substantive grounds. The proposition that without the state we would have inequality, destitution for the masses, rampant greed, and so on is a familiar charge which attempts to point out that libertarianism is undesirableand/or unjustifiable.

A further point of opposition is that libertarianism and the drive towards it is simply utopian or idealistic, and that libertarians are hopeless day dreamers, lacking any awareness of how the world “really” works. In other words, that, regardless of whether it may be desirable, some combination of one or more of impossibility, improbability or the simple unwillingness of anyone to embrace the libertarian ideal renders libertarianism either wholly or primarily unachievable. It is this specific objection that we will address in this essay.

Let us first of all recount the libertarian ethic of non-aggression, which states that no one may initiate any physical incursion against your body or your property without your consent. From this we can state that the goal of the libertarian project, broadly, is a world of minimised violence and aggression. Consequently, the questions we have to answer is whether a world of minimised violence and aggression is unachievable and, hence, utopian.


The first aspect to consider is whether the attainment of the libertarian ethic is either a physical or logical impossibility. Clearly, in order to be valid, an ethical proposition must be within the grasp of physical capability. An ethic requiring each person to be in two places at once, or to make three apples equal five apples by adding only one more would be ludicrous. These are unattainable goals, regardless of how hard one might try. Similarly, we can dispose of ethical propositions which are not strictly impossible but, we might say, are technically impossible on account of the fact that the means required to achieve them are inaccessible to all or most individuals. For example, an ethic that requires a person to leap from Britain to China would fail in this regard. Such a feat is not strictly impossible as a person’s feet could leave the ground in Britain and fly through the air to China. But the means of fulfilling this imperative have not yet come into our possession and so as a guide to acting now in the world as it is today it is plainly hopeless.

When we consider the libertarian ethic, it is clear that it does not come anywhere near these kinds of impossibility. In fact, this ethic, being a requirement to not commit certain acts, is one of the easiest of all ethics to adhere to. You simply have to refrain from initiating any act which interferes with the physical integrity of another person’s body or property – something which you can do, right now, sitting in your armchair. Thus, it is within the power of everyone here on Earth, right this very moment, to bring about a world free of violence and aggression simply by not moving one’s body towards committing such acts. Indeed, we can even say that it is physically harder to breach the ethic – if I want to commit a violent act I have to actually get up, find someone, and muster the effort to assault or rob them instead of following the much lazier route of just keeping still.

This may seem rather trite, but compare the physical attainability of this ethic with other ethics such as conquering poverty, spreading democracy, promoting equality, or even more ethereal goals such as seeking happiness and fulfilment. All of these are regarded, in the mainstream, as perfectly valid and noble, and yet they are far harder to achieve than the libertarian ethic because they all require some kind of positive action. Conquering poverty requires more work, more productivity and more wealth creation; spreading democracy seems to require armed invasions, active peacekeeping, the setup of institutions to hold elections and the willingness of the population to get off their backsides and vote (assuming, of course, that such an ideal is genuine and not simply a veneer for power and control over resources); equality requires the active redistribution of wealth which has to have been created by productive effort in the first place. On the ground of impossibility, therefore, we can say that libertarianism, which is derided, is the least utopian goal amongst all of these others, which are lauded.

If this was not enough, however, the state, the very same people telling us that the libertarian ethic is null and void, attempts to achieve goals each day that are readily accepted by the mainstream and yet are, on a proper understanding, literally impossible. For instance, it is impossible to guarantee full employment if you impose minimum wages; it is impossible to price a good or service below its market value and to not expect it to be inundated by demand and, thus, shortages (think healthcare, jammed roads, etc.); and it is impossible to create wealth by printing paper money. Yet the state believes that it can do all of these things.

On this last point, we surely have to acknowledge the sheer impossibility and, consequently, the utopianism of the current situation of endless debt and extravagant spending. At the birth of social democracy, Western nations had accumulated several generations’ worth of capital that had raised the standard of living by a significant magnitude. This provided a seemingly inexhaustible fund for politicians to bribe voters, showering them with goodies in the form of retirement benefits, welfare payments, nationalised industries, publicly owned infrastructure, and so on in return for their votes. Because politicians like to spend and spend and spend without raising current taxes, much of this spending was fuelled by borrowing, with the productivity of accumulated capital enabling tax revenue to service this debt. The borrowing and inflation has benefited the bookends of society – the poorest, who receive the majority of the welfare payments, and the very rich, whose assets survive the inflation by rising in nominal value – as well as the baby boomer generation, which benefited from being able to receive the goodies before the bill to pay for them fell due. The profligate waste disguised a gradual but relentless capital consumption until now productivity can no longer provide for the burgeoning level of spending. Governments today are even struggling to service the interest on their debt through tax revenues, having to borrow more just to pay down previously accumulated debt. Particularly now as the aforementioned baby boomer generation has begun to retire, leaving behind it a decimated workforce supporting a heavy generation of retirees, this situation is likely to only get worse.

Assuming, therefore, that sufficient productivity to meet all of these liabilities is not going to occur, there are three possible options – to default on the entitlements; to default on the debt; or to print enough money to pay for everything.

The first option would cause mass social unrest; the second would cause financial markets to collapse; and the third would cause hyperinflation of the currency.

This is an unpleasant but soon to be necessary choice. It is precisely because the monetary orthodoxy is no longer working that solutions that have a non-state impetus, such as a return to gold, or crypto-currencies stand out in relief as viable alternatives rather than impossible dreams. Thus it is ridiculous for even moderate statists to claim that libertarianism is utopian when the lifeblood of social democracy – state managed money and finance – is on the verge of collapse.

Human Nature

A second reason why it is alleged that the libertarian ethic is utopian concedes the fact that it is not strictly impossible to achieve but, rather, that it is contrary to some vaguely defined impression of “human nature”. This view is nearly always based on the (correct, but superficial) observation that “man is a social animal” and that humans have, throughout their history, grouped themselves together into different collectives such as tribes, cultures, nations and, ultimately, states. The vicissitudes of these kinds of groups – that is, rules that subjugate the individual to the collective and, ultimately, the presence of violence and aggression – supposedly mean that the libertarian ideal is unrealisable, at least to the degree that libertarians would prefer.

Most of these critiques fail owing to their conflation of the state with society, and their resulting assumption that the libertarian admonishment of the former leads to a denial of the latter. As a corollary they misconstrue also the libertarian emphasis on individual rights as advocacy for some kind of selfish, atomistic existence.

These views can normally be disposed of easily enough as there is, of course, no libertarian quarrel with either social organisations or society as a whole – libertarianism takes full account of the social dimension of humanity. Such critics simply fail to realise that the role of society is not to fulfil a “common purpose” or some kind of undefined “common good” dictated by the state but to act as a means for each individual to better satisfy his own purposes peacefully and voluntarily. Nor does the pursuit of such purposes, permitted by individual rights, have anything to do with selfishness – a person is as free to choose to spend his entire life helping others as much as he is to hoard a vast fortune that he shares with no one.

Rather, the claim we wish to examine here is a more basic one. This is whether the kinds of complex institution with which libertarians are preoccupied – that is, states, governments, parliaments, bureaucracies, etc – owe themselves to “human nature” in the sense that these things are, in some way, biologically inevitable; or whether they are, in fact, the product of consciously wrought human choice. To put it bluntly, is the impetus which caused humans to create the state of the same ilk that causes a pig to roll in muck?

This question is either tacitly assumed to be yes or completely ignored by the “human nature” objection to libertarianism. For example, during his misinformed attempt to demonstrate the disregard of libertarianism for the social dimension of human existence, American biologist Peter Corning has the following to say:

One problem with [the libertarian] (utopian) model is we now have overwhelming evidence that the individualistic, acquisitive, selfish-gene model of human nature is seriously deficient […] The evidence about human evolution indicates that our species evolved in small, close-knit social groups in which cooperation and sharing overrode our individual, competitive self-interests for the sake of the common good […] We evolved as intensely interdependent social animals, and our sense of empathy toward others, our sensitivity to reciprocity, our desire for inclusion and our loyalty to the groups we bond with, the intrinsic satisfaction we derive from cooperative activities, and our concern for having the respect and approval of others all evolved in humankind to temper and constrain our individualistic, selfish impulses.

It is difficult to dispute much of this account. However, Corning never explains what caused these things to arise or why it was that humans embraced them. Why do we co-operate? Why do we share? Why do we have a “desire for inclusion”? Why is there a “loyalty to the groups we bond with”? Why are we preoccupied with a “respect and approval of others”? Did all of these things just happen in the same way that flies swarm to dung, or were there some kind of consciously appreciated reasons for each human to embrace these things?

The fact that these questions remain unanswered suggests that it is the critics of libertarianism who have failed to examine human nature fully and, consequently, have the deficient understanding of the concept. The aspect of human nature that most certainly does exist – that which separates us from other animal species – is the ability to determine, consciously, our goals, and to use the mental faculty of reason to investigate the world around us in order to discover the best means for pursuing those goals. These conscious human choices and subsequent, deliberate actions are evident at a very basic level. We may each, of course, act reflexively, such as when you touch a red hot object and recoil in an instant. Such an action is not the product of choice but of stimuli that provoke your brain into an automated reaction to prevent imminent bodily harm. Such actions are, therefore, a part of our nature and there is very little that we can do to prevent them. Nearly everything else a human does, however, is the product of his conscious choice. Even when we act emotionally or out of instinct – for example by punching another person in a fit of rage or satiating the carnal desire for intercourse by having sex with a stranger – we are still expected to choose to exercise control over these impulses. Such expectation is manifest in the fact that if the act in question happens to be illegal the law will still hold us responsible. Only mental impairment to the extent that there is a severely diminished connection between thoughts and actions will absolve one of moral responsibility for even our more animalistic outbursts.

To ignore this aspect of conscious choice is to ignore the sparkling jewel in the crown of human nature, and leads one to draw fundamentally false conclusions about social phenomena. As Murray N Rothbard puts it:

Only human beings possess free will and consciousness: for they are conscious, and they can, and indeed must, choose their course of action. To ignore this primordial fact about the nature of man – to ignore his volition, his free will – is to misconstrue the facts of reality and therefore to be profoundly and radically unscientific.

This ignorance to which Rothbard refers renders the “human nature” objection to libertarianism as one of the laziest counterarguments, endowing superficial observations of human behaviour with some kind of inevitability and, thus, immunity from moral scrutiny. For if human behaviour is the product of conscious choice then not only is such behaviour in no sense “natural” but the very fact of choice indicates that alternative paths cannot be ruled out – and that, therefore, the libertarian is not struggling with futility against human nature,but rather, is pursuing the perfectly achievable path of influencing human will. As we shall see now, this is precisely the case.

In deciding the best course of action for fulfilling the ends that he desires, each human has to make a choice between three broad routes of accomplishment. First, an atomistic, isolated existence; second, social co-operation; or, third, violence, pilfer and pillage. The first has been almost universally discarded on account of its failure to furnish anything but the most impoverished existence. The other two, however, can prove extremely fruitful for those who pursue them.

Whether the pursuit of social co-operation on the one hand or of violence on the other has prevailed at any one time is a product of the human evaluation of the particular circumstances and how to best meet his goals within those circumstances. Appreciation of those circumstances is a product of mental effort – in each case, there were goals and humans pursued, deliberately, what they thought were the best means available for attaining those goals in the environment in which they found themselves. Even though the evaluation may have been wrong and resulted in failure, the fact remains that whichever path was taken did not owe itself to any “natural”, uncontrollable, instinctive urge. If we marvel at the great achievements of social co-operation – for example, the gothic splendour of St Pancras railway station; the intricacy of the internal combustion engine; or the ambition of Microsoft to put a PC in everyone’s home – we can see that the people who created these things were motivated by something more than a scramble to satiate some engrained longing for “community”. Similarly, on the violent side, neither of the world wars occurred because everyone felt that it had been too long since the last punch up. The only human institutions that can be possibly be accorded the description of being in some way “natural” are those which emerged as a result of the (oft-abused) term “spontaneous order” – institutions such as language, money, market prices, and so on which are not the deliberate result of any one individual or group of individuals acting together. But even these institutions are the result of consciously chosen human purpose – they just lack deliberate human design. For instance, we would have neither money nor prices if people did not choose to trade.

Because of the varying circumstances of history – some of them natural phenomena, and some of them the product of the past actions and ideas of humans – it has been the case that the incidence of either social co-operation on the one hand or violence on the other have each waxed and waned throughout the sands of time. Each millennium has been punctuated by periods of relative tranquillity and periods of relative turmoil, with the violent route peaking in the most recent hundred years or so. Meanwhile, social co-operation received significant boosts during the agricultural and industrial revolutions.

The unfolding of the latter provides a clear example of how circumstances can motivate human choices. For instance, contrary to the romanticised view of pre-industrial, rural life, humans abandoned their backbreaking and unproductive agricultural lifestyles to flee to urban centres because the prospect of industrial work, made possible by new inventions and machinery, promised a much higher standard of living than was previously possible. In other words an expansion of social co-operation was the most attractive option. However, after the elapse of one hundred years or so of wealth creation, it became possible for socialist theories to persuade people, on account of the unequal “distribution” of this wealth, that violent appropriation from those who had gained more was now more appealing. Thus, the twentieth century was plagued by varieties of socialism that made the false promise to disgorge all of this wealth from the allegedly exploiting classes and thus banish the deprivations of the workers forever. However, once all of this failed in the late 1980s and early 1990s, people again turned to market economies. Now we appear to be languishing somewhere in between, with Western societies, the apparent victors of the Cold War, continuing to socialise their economies and consume their capital under the aegis of increasingly authoritarian governance, whereas Asian societies appear to be doing the opposite.

The fact that each human moves himself towards either social co-operation on the one hand or towards violence on the other in order to better achieve his needs can be illustrated further by envisaging a future when almost all needs are satiated, i.e. when material scarcity is all but conquered. It would not be impossible for economic progress to one day reach a level where any good or service, including the provision of private security and defence, could be produced at the touch of a button. In other words almost all of our needs could be provided for in exchange for a trivial amount of effort. If this was the case then surely it is obvious that the need for any human to pursue either social co-operation or violence on a wide, systematic scale would be all but obliterated? Why bother co-operating with your fellow human, or why bother shooting at him, if everything you want can be provided from some kind of Star Trek style “replicator” device? Even if someone did shoot at you what defensive purpose would the state serve if everyone’s person and property could be protected by, say, some kind of invisible force field? If we ever come to live in such a quasi-paradise is it not clear that any kind of large, systematic organisation that serves to enable either social co-operation or violence – states, companies, etc. – would dissolve for a lack of any achievable purpose? All that is likely to remain is groups that would exist solely for pleasure – families, friendship groups, congregations, and groups revolving around pastimes, etc. Thus, what would emerge is something akin to that which is advocated for by “purist” libertarians who supposedly ignore “human nature” – human existence where systematic collectives and pervasive violence are largely relegated to distant memory. Such a society is, no doubt, a whimsical fantasy, at least in our lifetimes. But it is clear that its failure to emerge would be as a result of a shortfall in economic progress and not on account of any discord with “human nature”.

The fact that co-operation is a means to the fulfilment of complex ends does not deny the fact that co-operation itself presents benefits – for example, from a sense of belonging, familiarity, and overcoming a feeling of loneliness. But even some of the groups that we seemingly take for granted, such as the family, were originally motivated by a consciously appreciated, economic concern – in this case trying to find the best environment in which to raise children.

Similarly, there may well be nutcase theories that exalt violence and war for the sake it. However, the objects of idolisation are often the derivatives of war rather than war itself, such as heroism, comradeship, bravery, victory parades, national pride, medals, and so on, to the extent that these things are viewed as ends in and of themselves. Actual war, on the other hand, is very unlikely to gain mainstream traction without a powerful economic incentive. Even when the idolisation of war seems to crystallise into a more substantive ideology – such as in Nazism – there is still something of a chicken or egg problem. Did the Nazi elevation of “blood and soil” and the wehrbauer (“warrior peasant”) appear first and then gain momentum only because of the economic circumstances of Germany at the time? Or did they arise later as somewhat romanticised embodiments of what was required to accomplish the already perceived economic necessity of lebensraum?

Nevertheless, even if we were to ignore all of these issues and say that co-operation and violence were engaged in purely for the sake it, none of this would make a dent to our basic thesis which is that they are the product of conscious, human choice – that the ends were evaluated consciously and the means undertaken deliberately.

With all of this in mind, therefore, we can turn to the question of the existence of the state. Without a shadow of a doubt, the state is the most violent and aggressive institution humans have ever spawned. There is not a single conflict that is worthy of mention in the history books that was not caused by the state or a proto-state entity, nor is there any such conflict that would not have been ameliorated by either reduced or absent state involvement. It is for this reason that libertarians focus all of their efforts on this institution. Thus, the objection to libertarianism on account of the allegation that it is contrary to “human nature” concerns, primarily, the question of whether the state is a phenomenon of “human nature” that we have to put up with and is, consequently, useless to fight.

From our preceding analysis, it should already be clear that this is not the case. The state exists for no other purpose than to serve as the ultimate vehicle of pursuing the violent method of achieving ones goals – of forcibly taking from some in order to benefit others.

The state has not existed as a uniform entity throughout human history. Rather, it has blossomed and withered in accordance with people’s desire to use it as such a tool of exploitation and the conviction of the public to either tacitly accept or actively promote its existence. All of the “great” institutions of states that we see today – parliament buildings, executive departments, highly trained armed forces and the complex weaponry and equipment they use, and so on – none of these things is in any way “natural”. Rather, they owe their existence to the fact that specific people, at specific times and places, believed that creating them was a worthwhile endeavour. Their final form that we see today is simply the outcome of centuries of consciously chosen behaviour.

The nature of the conflicts that the state has provoked has also varied – invasion, wars and conquests, direct enslavement of the domestic population, heavy taxation, etc. None of these things simply “occurred” out of nowhere but were undertaken for specifically chosen purposes. Moreover, it is also the case that the strength and power of the state has varied throughout history and varies also across the globe today – all the way from the horror of the former Soviet Union, possibly the worst state that there has ever been, down to the relative powerlessness of the Swiss canton. It is, therefore, far from ridiculous for libertarians to condemn the state as immoral and evil or for them to fight for institutions (or for a realigned global balance of power) that makes the route of violent appropriation via the state a less attractive option. This is something that the Swiss model has achieved domestically and which, globally, may be achieved by the relative rise of China and Russia as a counterweight to the hitherto condition of American uni-polarity that has allowed the latter to promulgate untrammelled aggression across the globe.

The state, therefore, is firmly and undeniably a consequence of human choice, not of human nature, and, as such, it is entirely legitimate to expose it to moral examination. As Karl Hess said:

Libertarians are not determinists who feel that unseen, mystic forces move men and history in inexorable patterns, up and down fated graphs. Libertarians, being radicals, know that men can move history, that Man is history, and that men can grasp their own fate, at the root, and advance it.

We might as well round off this defence against the “human nature” objection to libertarianism by pointing out that human nature is, in fact, the raison d’être of freedom, not its antithesis. Libertarianism understands humans for what they are – independently thinking, desiring, choosing, and acting beings. Whichever way you look at it there is no higher unit than the individual person who undertakes these activities. Even when our thoughts and desires are influenced by others and the groups we choose to join, the choice to pursue them ultimately remains ours – and, as a result of any particular choice, it is us as individuals who each feel the joy of success and the pain of failure. Libertarianism allows each human, warts and all, to act to fulfil these independent desires and choices within the confines of his own person and property, or within any joint enterprise with willing partners.

Statism, on the other hand, has always had to override these individual choices, desires, and actions in order to fulfil some grander vision of a “better society”. In the first instance it hopes that these individual desires can be assumed away by imagining that some kind of newly moulded man will work with glee towards “higher” ideals that are desired by the leaders and busybodying visionaries. What they do not realise is that the initial popularity of statism emanates from the fact that individual people think that it will promote what they want while forcing others to shoulder the burden. If socialism, for example, means “from each according to his means to each according to his needs”, everyone expects to be in the category of “needs” rather than “means” – they seldom consider the fact that they may be the ones with the “means” who suffer day and night to meet someone else’s “needs”. As soon everyone realises that the latter is the reality then any incentive to co-operate dissolves and so the state has to wheel out the guns and gulags in order to force people into line. This discord with human nature is one of the reasons why socialist experiments have collapsed while freer societies have prospered. It is, therefore, individual freedom and not an automated, robotic adherence to the state that is in keeping with human nature.

Radicalism vs. Gradualism

The third and final version of the argument that libertarianism is “utopian” and which we shall explore here accepts that libertarianism is neither physically impossible nor necessarily contrary to human nature; however, so this argument goes, libertarianism still fails as the democratic state is so entrenched in the world and people are so inherently statist that any hope for a libertarian society will founder upon the rocks.

The basic thrust of this argument is an assault on libertarianism’s inherently radical nature, and the alleged hopelessness of pursuing radical ideas more generally. Anti-libertarians are content to dismiss any form of libertarianism on these grounds alone; some free market proponents, on the other hand – such as the late Milton Friedman – have accepted this argument and attempt to achieve greater freedom by working within the state system through some kind of gradualism. We will challenge both the anti-radicalist defence of statism and the gradualist approach to freedom here.

In the first place, a proposition may be radical on account of the fact that an opposing proposition is widely accepted and well entrenched. However, it does not follow from this that the importance of either the truth or justice of an unpopular proposition is in any way diminished. For instance, everyone may have once thought that the earth was flat and was at the centre of the universe. However, this consensus changed neither the fact that the earth is actually spherical and orbiting the sun, nor the fact that such an understanding would yield significant progress for human knowledge of their environment. Similarly, if everybody thought that it was perfectly acceptable to murder blacks or rape women and, moreover, everybody was merrily raping and murdering, this would not change the fact that these are inherently evil acts against which every effort should be made to stop them – and, moreover, that the stoppage should be immediate. The difficulty of countering well entrenched views will certainly render our strategy in pursuing a radical goal more difficult, but it does not, contrary to the anti-libertarian stance, invalidate the goal in the first place. Truths do not go away merely because everyone wants them to and in some cases revelation of the truth – such as the true nature of the state and the way it blights mankind – would have such powerful consequences that suffering the difficulty of attainment is worth it. Indeed, we might say that the failure to speak truth to power – or to overwhelming odds – is a sign of cowardice more than it is a sign of realism. The complexities involved in mustering the requisite courage are perhaps best captured by Joseph R Peden when he says:

The libertarian revolution is not the work of a day – or a decade – or a life-time. It is a continuous process through the ages. The focus of the struggle changes from time to time and place to place. Once it involved the abolition of slavery; now it may be women’s liberation; here it may be a struggle for national independence; there it may center on civil liberties; at one moment it may require electioneering and party politics; at another armed self-defense and revolution […] There is a tendency among many libertarians to look for an apocalyptic moment when the State will be smashed forever and anarchy prevail. When they realize that the great moment isn’t about to come in their time, if ever, they lose faith in the integrity and plausibility of libertarian philosophy […] [This] should warn us that libertarianism can quite easily become an adolescent fantasy in minds that are immature and unseasoned by a broad humanistic understanding. It should not be an idée fixe or magic formula, but a moral imperative with which once approaches the complexities of social reality.

From observing the unfolding of history, we can see quite clearly that ideas – and radical ideas especially – do matter. As the Spanish philosopher José Ortega y Gasset reminded us “civilisation is not ‘just there’ – it is not self supporting.” In other words, the existence of civilisation cannot be taken for granted and requires instead our active willingness to engage with the ideas which uphold it while repelling those that seek to destroy it. Most of either of such ideas have, at some point, begun as radical, popularly derided theories embraced by only a few intellectuals or pamphleteers – yet their subsequent, widespread adoption has had profound consequences. For instance, without enlightenment philosophy, it is unlikely that the American, French and Industrial Revolutions would ever have occurred; Karl Marx died in relative obscurity outside of radical circles, yet his theories went on to enslave half the globe; democracy has scarcely been taken seriously for almost the entire history of political thought, yet now one is laughed out of the room for even entertaining the suggestion that it is anything shy of brilliant. Moreover, it is difficult to dispute the fact that the triumph of democracy has endowed the state with a hitherto unseen halo of legitimacy that has served to justify its ever increasing expansion and perpetuation of atrocities. For example, millennia of monarchs, emperors and entrenched dynasties failed to create a world trading entirely with paper money; yet democracy “achieved” it in just a few decades.

In short, therefore, what people think has changed dramatically and has had very real effects upon humanity. Consequently we must be prepared to influence what they think if we want to change the course of history. Ideas that are pummelled today will be praised tomorrow, and the seeming remoteness of victory today does not mean that victory will never arrive. As T S Eliot said

If we take the widest and wisest view of a Cause, there is no such thing as a Lost Cause, because there is no such thing as a Gained Cause. We fight for lost causes because we know that our defeat and dismay may be the preface to our successors’ victory, though that victory itself will be temporary; we fight rather to keep something alive than in the expectation that it will triumph.

Turning now to gradualism, any strategy which has jettisoned an ultimate goal or radical principle ends up bringing about a state of affairs that it is qualitatively different. The reason for this is that such a strategy needs to fill its ideological vacuum with some other guiding philosophy in order to inform its choices. For explicitly gradualist approaches towards freedom this has ended up being some kind of utilitarianism. In addition to this, as the focus of such gradualism has been to work hand in hand with as opposed to against the state, its proponents have been forced to accept the state’s perpetuation of basic injustices (such as its taxes, regulations, and monopoly over law, order and defence), thus morphing any of their criticism in this regard to being criticisms of degree rather than of kind. Consequently, any fulfilment of their obsession with “efficiency” has allowed the gradualist approach to accommodate and expand these injustices as they see fit. Therefore, the nature of the liberalising project has morphed into something which, rather than challenging injustice, instead permits it to be accommodated or replaced by further injustices.18

For example, debates in the nineteenth century over the abolition of slavery were mired by considerations of whether the slaveholders should be “compensated” for the loss of their “property” in the slaves. It took the radical philosopher, Benjamin Pearson, to point out that it was the slaves who should be compensated for their years of misery while the slaveholders should be punished. Similarly, proposals for “school vouchers” wax lyrical about the benefits of “choice”, “competition” and “consumer sovereignty” without considering the choice and sovereignty of the tax payers who are mulcted to pay for it all, let alone the indoctrinating nature of state education. And, of course, any talk of tax reform is persistently blighted by some perceived necessity for any changes to the tax code to be “revenue neutral” – a concern which, judging by its prominence in the first paragraph of its 2017 tax reform plan, seems to be a priority for the Adam Smith Institute.

So going back to our earlier, hypothetical society that enjoys raping women and murdering blacks, such approaches would translate into proposals to “compensate” murderers and rapists for their loss of enjoyment from murdering and raping; or to issue “rape vouchers”; or to ensure that “murder reform” was “murder neutral”. Framed in this light we can see that these proposals are not only utterly ridiculous but completely immoral – and, moreover, would result in something that is qualitatively different from anything we would regard as a free society.

This critique of the gradualist approach does not seek to admonish anyone who accepts a movement towards an ultimate goal which, although falling short of it, yields a significant improvement. For example, we could accept, say, a 10% reduction of all taxes across the board with no strings attached, even if a residual tax burden remains. The point is that one must, in the first place, approach the table hoping to get everything that one wants in the fullest and quickest manner possible. When confronted by murder, rape, and slavery, for instance, one must begin by hoping to eradicate these abominations completely. All actual outcomes must then be judged in relation to this yardstick. On the other hand, if you come to the table demanding only half measures then you will never leave with anything more than half measures. No doubt, it is for this reason that William Lloyd Garrison said “gradualism in theory is perpetuity in practice.”

Neither also are we seeking to criticise anyone who would caution us against abolishing a certain injustice on account of the fact that an even greater calamity might follow – such might be the case if, for example, welfare recipients rioted as a result of their funds being cut off. This is simply an expression of prudence that seeks to prevent causing more harm to the existing victims of the state than has already been inflicted. It is a million miles away from the travesty of the gradualist approach which regards the livelihoods of the perpetrators of injustice, whether they are murderers, rapists, slaveholders or just parents who expect “society” to educate their children, as being more important than the liberty of the victims. As Murray N Rothbard says:

Gradualism in theory indeed undercuts the goal itself by conceding that it must take second or third place to other non- or antilibertarian considerations. For a preference for gradualism implies that these other considerations are more important than liberty.

Indeed, the fatal flaw of gradualism is that it cares too much about rocking the boat rather than dealing with the pirates who have commandeered it (although we should probably also mention that the opportunity to share in the rum barrel plays a dimension in this regard). The purpose of radical ideas, however, is not to keep the ship afloat – it is to come to the rescue when it sinks. And, as noted earlier, our ship of heavily socialised democracy is almost certainly going sink at some point. When, for instance, Soviet communism collapsed in the 1980s-1990s, the last thing their long-suffering people wanted was a watered down version of that which had already failed them so catastrophically. Given that Western academics had been so pre-occupied with glorifying Marxism or preaching Keynesianism this one, great opportunity to administer the coup de grâce to all forms of socialism while they were on their knees was simply wasted.

In at least two cases where free market reforms have been implemented successfully and long lastingly – in Hong Kong under John James Cowperthwaite and in New Zealand under Roger Douglas, both of whom were the Finance Ministers in their respective jurisdictions – a crisis was met with a “big bang” approach that swept away statist interference across the board in one, fell swoop. Douglas himself took the time to explain why such an approach and only such approach is likely work.

First, clear goals and introducing them speedily prevent special interest groups from dragging the project down – by the time these people have worked out how to respond to a particular reform another one has already appeared. Second, reaching those clear goals in quantum leaps, rather than step by step, means that their positive effects appear much sooner, generating public support for them very quickly. This renders any endeavour to reach consensus with interest groups prior to the introduction of reforms – which Douglas regarded as rarely possible – unnecessary. This also demolishes the problem of residual economic distortions which linger when only some state interference is rolled back in a piecemeal fashion. Third, the snowballing effect of support gained from tangible progress and prosperity completely neutralises the opposition – devoid of the ability to suggest any practical alternative that could be so good, they are reduced to spouting empty platitudes.24 And finally, the faster you go the shorter the period of any uncertainty concerning the legal and regulatory environment, allowing businesses and entrepreneurs to make plans and invest capital sooner.

All in all, Douglas took his shot and made the kill while his opponents hadn’t even picked up their guns. The fact that the results spoke for themselves initiated a circular motion where rapid and radical reform led to actual success that, in turn, served to create increased support for further reform. This contrasted with the approach of Douglas’ predecessor, Robert Muldoon (who was Prime Minister concurrently) who would only change things if no one was left worse off in the short term. Thus he ended up changing little.

We can round off this defence of radicalism by conceding to both anti-libertarians and to gradualist free marketers their best possible scenario. What would happen if the libertarian goal was, in fact, achieved in one, fell swoop and the state vanished, right now, in an instant? What would happen if, to mimic a scenario posited by Leonard Read26?, we could push a big red button which would enable us to obliterate the state immediately and unremorsefully?

Statists would like to tell us that society would soon collapse into murderous chaos; gradualists would probably say the same thing. But would this necessarily be the case? As we said earlier, the existence of the state is a product of conscious choice – it is a means for achieving certain ends. When the state ceases to provide the means for fulfilling these ends it will not be the case that we all give up and fail to look for an alternative. Nature abhors a vacuum, and acting man even more so.

Therefore, if the state was to vanish in a puff of smoke, there may well be a transitory period of restlessness but people would soon take steps to protect and defend their property, with these private means eventually replacing the monopolistic provision of the state. Actual breakdowns of civil order have never lasted long enough for such private means to flourish or to crystallise into formal organisations, but we have seen their genesis in prominent incidents when the official, state police failed to come to the rescue – for example, in Koreatown during the 1992 Los Angeles riots, the 2011 UK riots, and in Ferguson, Missouri, in August 2014.

In any case, it is not true that people refrain from engaging in private murder and theft simply because the state would clobber us if we did otherwise. Without the state the number of people willing to commit private murder and theft would still be in the minority. The majority abstain from these acts not because the government is preventing them from doing them but because a) they recognise them as evil and b) beyond the confines of immediate gratification they are ultimately counterproductive to maintaining the standard of living. Abolishing the state will not change this view. If any proponent of a statist order was to suggest otherwise then it is permissible to ask him what he would do if the state vanished suddenly. Would he be among the looters and plunderers? Would he be out smashing windows and burning down shops? Or would he be trying to create some semblance of civil order? If he would opt for the latter then on which grounds would he assume that everyone else would choose the former? In fact, getting rid of the state will annihilate the institution which is viewed as being the sole conduit for acts of violence to be perpetrated legitimately. Thus, by removing this veneer of legitimacy, the immediate destruction of the state would bring about a swift, moral improvement of the populace rather than its retrogression into barbarism.

Interestingly, the gradualists in this instance have a weaker argument than the outright statists. Statists have an overriding distrust of the marketplace to create any kind of acceptable social order and so their conclusion that the immediate disappearance of the state would lead to chaos does, at least, have some consistency. Gradualists, however, wax lyrical about how “efficient” private individuals are when it comes to giving us more food, clothing, cars, and so on. But, for some reason, they do not trust those private individuals to manage any transition to a free society.


In closing, we can note that although libertarian principles are shamelessly radical, the path to fulfilling them may not be that radical at all. Centralising, statist projects, such as the EU, attempt to destroy the cultural, customary, and religious foundations of Western civilisation in order to replace it with their own, artificially constructed, trans-national, multicultural monoliths. It is, in fact, theseaims that are being rejected as too radical by the subjugated populations. In challenging them libertarians are, for the most part, trying to stop the world from being created anew, rather than create it anew ourselves. Moreover, the leftist/statist frenzy has now descended into being such a farce that political satirists are finding it too difficult to make things up – and that what they previously considered as far fetched jokes based on just a kernel of truth are inflating into full blown reality.

This is not difficult to understand in an age which regards itself as immune to not only well-established social customs but is also engaging in an Orwellian endeavour to rewrite basic logic and common sense – that “free speech” is now speech the left agrees with; that “tolerance” means violently assaulting those who disagree with you; that “hate crime” is more evil than real crime2; that gender does not exist, or if it does exist then there is something like fifty of them; that we need to argue about who can use which toilet. In confronting all of this it seems that libertarians do not need to appear radical and certainly not utopian – instead, we may just need to be “normal”.

Published:7/8/2018 9:35:47 PM
[Markets] Bookstore Owners Calls Cops On Woman Who Confronted Bannon

The owner of a Richmond, VA bookstore says he called the cops on Saturday after a woman confronted and berated former White House chief strategist Steve Bannon - calling him a "piece of trash," according to the Richmond Times-Dispatch, which noted that Bannon grew up in Richmond. 

Nick Cooke, owner of Black Swan Books called police around 3:15 p.m. to report "someone yelling at a political figure in the bookstore." Richmond police confirmed the call to the Dispatch

“Steve Bannon was simply standing, looking at books, minding his own business. I asked her to leave, and she wouldn’t. And I said, ‘I’m going to call the police if you don’t,’ and I went to call the police and she left,” Cooke said. “And that’s the end of the story.”

Cooke told the Dispatch: "We are a bookshop. Bookshops are all about ideas and tolerating different opinions and not about verbally assaulting somebody, which is what was happening."

One wonders if Cooke can next look forward to angry protests outside his bookstore after defending Bannon.

The Saturday confrontation marks the latest in a spate of incidents in which pro-Trump individuals have been harassed by angry liberals, which has accelerated since Rep. Maxine Waters (D-CA) openly called for liberals to harass Trump supporters. 

In June, demonstrators confronted Homeland Security Secretary Kirstjen Nielsen at a Mexican restaurant in Washington, D.C., and the owner of the Red Hen, a restaurant in Lexington, declined to serve White House Press Secretary Sarah Huckabee Sanders.

This past Monday, a woman with her 2-year-old son confronted Trump’s now former Environmental Protection Agency Administrator Scott Pruitt in a D.C. restaurant and urged him to resign. Trump said Thursday that he had accepted his scandal-plagued EPA chief’s resignation. -Richmond Times-Dispatch

Protesters with the Democratic Socialists of America - Alexandria Ocasio-Cortez's party also showed up at Nielsen's Alexandria townhouse.

Meanwhile, White House adviser Stephen Miller - largely credited with pushing President Trump's "zero tolerance" immigration policy of arresting and processing those entering the U.S. illegally - was heckled at a Mexican restaurant two days before Nielsen was harassed. 

In Early June, photos of "caged children" in ICE detention centers which happened under Obama went viral - but by the time anyone pointed that out, the outrage machine was already in full swing. 

Largely ignored was the fact that Trump is merely enforcing laws created under Bill Clinton and strengthened under Bush II - while Obama separated migrant families all the time and is being sued for keeping children in brutal conditions. Making matters worse was a fake news picture of a crying "separated migrant child" who was never actually separated from her parents. 

Meawhile back in Richmond, Cook would not speak to whether he has a personal relationship with Bannon - only describing the former White House adviser as "a private person in my bookshop." Meanwhile, some in social media wasted no time in trotting out the "N" word. 

Published:7/8/2018 6:05:02 PM
[US News] WTF is wrong with him? Philippe Reines posts phone number and address of local bookstore owner over Steve Bannon incident

A local bookstore owner in Richmond, VA is feeling the wrath of liberal anger today all because Steve Bannon decided to shop in his store. According to the Richmond Times-Dispatch, the former White House aide was shopping in Black Swan Books when another patron came called him a “piece of trash.” Nick Cooke, who owns […]

The post WTF is wrong with him? Philippe Reines posts phone number and address of local bookstore owner over Steve Bannon incident appeared first on

Published:7/8/2018 4:35:55 PM
[Markets] Large-Scale Riots Continue In France For 4th Night

Riots continue in France after a 22-year-old Aboubakar Fofana lost his life in police control on Tuesday. The Compagnies Républicaines de Sécurité (CRS) official responsible for the has been indicted but remains free under judicial supervision. This decision has rekindled tensions in Orvault, Rezé, and the neighborhoods of Nantes, Breil, and Bellevue.

Ouest-France reports that the security forces wiped Molotov cocktails at Breil and Bellevue and responded with tear gas grenades.

As GEFIRA reports, for four nights straight, there have been riots between African migrants and the French police in the city of Nantes. The riots began after the police stopped and shot an alleged criminal, named Abubakar.

On Wednesday the police declared that they shot the African young man in self-defense after he tried to overrun a police-officer.

The scale of the current riots is more extensive than we see now on a regular basis in the French suburbs. The rioters torched numerous cars, a petrol station, a community library, a school and several shops.

There is even a report that a bullet from a rifle damaged a police officer helmet.  

Friday afternoon the police admitted that the killing of Abubakar was not self-defence but an accident.

The  GEFIRA team expect riots in France to become more and more violent and eventually lethal. Like most Western European societies and the US, the demographic change and the gradual replacement will come with a hefty price.

There are signs that white French bourgeoisie youth will join the violent protests, like Black bloc and Antifa.

Minutes after the deadly shooting incident in Nantes on Tuesday 3 July 2018

Face to face between FN and anti-fascists in . Front National came to support the CRS (police).

Nantes lives fourth night of riots with at least 35 cars set ablaze

The multiple burned cars in Rezé

Thousands of books in the library went up in smoke at Malakoff

The Chienlit pays homage to their deceased brother by destroying. It is a history of making a neighbourhood a ghetto and continue to play the victims. And the left supports these people.

Guys are so smart they burned even a gas station.

St. Mark’s Square Rouen last night: a banner rolled up and a smoke bombs “in support of Aboubaker”

Individuals set fire to the Leonardo da Vinci High School in Nantes. They burned the lodge and the vehicle of the reception officer. I salute the action of firefighters and law enforcement. The perpetrators of these criminal acts must be identified, arrested and convicted with the firmness + WDM

Some damage east of Nantes

In Nantes, in the Dervallieres district, there is nothing left except the bank and an Aldi. African outlaws burned all the rest of the shops during the night.

Escavator burns in the neighbourhood Bottiere also in Nantes.

Published:7/8/2018 7:32:49 AM
[change] Why I’m Afraid to Admit I’m Happy I meditated every goddamn day. I wrote gratitude lists. I imagined the life I wanted. I read self help books. I fought for happiness. Published:7/6/2018 5:55:11 AM
[Markets] Germany: 'Decapitating' Freedom Of The Press?

Authored by Stefan Frank via The Gatestone Institute,

In an apparent attempt to sweep under the rug a recent double homicide in Hamburg, Germany, authorities there censored the story. They also raided the apartments of a witness who filmed a video describing the murder, and a blogger who posted the video on YouTube.

The murder, which made headlines worldwide, occurred on the morning of April 12. The assailant, Mourtala Madou, a 33-year-old illegal immigrant from Niger, stabbed his German ex-girlfriend, identified as Sandra P., and their one-year-old daughter, Miriam, at a Hamburg subway station. The child died at the scene; her mother died later, at the hospital. The woman's three-year-old son witnessed the murders.

According to the prosecutor's office, Madou -- who initially fled the scene, but then called the police and was arrested shortly thereafter -- acted "out of anger and revenge," because the day before the incident, the court had denied him joint custody of his daughter.

It later emerged that for months Madou had been threatening to harm Sandra P. and the baby. A senior public prosecutor told reporters that the police investigated the woman's charges, but had concluded that the "threats were not meant seriously" and did not pursue the case.

Furthermore, half a year earlier, in October 2017, a judge revoked a restraining order that Sandra P. had obtained against Madou two months earlier, on the grounds that he saw "no evidence" that Madou had threatened her. That was when Madou's threats increased and he explicitly announced: "I'm going to kill our daughter, and then I kill you!"

A detail of the murders that has never officially been revealed, is that Madou apparently attempted to decapitate the baby. This detail was mentioned by a commuter -- Ghanaese citizen Daniel J., a gospel singer at an evangelical church in Hamburg -- who happened to arrive at the subway station moments after the attack and filmed the scene on his phone.

In the video, police officers can be seen questioning witnesses, and paramedics are surrounding what appears to be the baby girl. Daniel J. says, in English, "Oh my God. It's unbelievable. Oh Jesus, oh Jesus, oh Jesus. They cut off the head of the baby. Oh my God. Oh Jesus."

Police question witnesses to the double-murder in Jungfernstieg subway station in Hamburg, Germany. (Image source: Daniel J./Heinrich Kordewiner video screenshot)


Heinrich Kordewiner, a blogger from Hamburg who discovered the video on Daniel J.'s Facebook page, uploaded it to YouTube.

A few days later, a team of state prosecutors and officers of the cybercrime unit of the Hamburg police arrived at Kordewiner's apartment with a search warrant, and confiscated his computer, mobile phone and other electronics, allegedly to find "evidence" of the "crime". He was -- and still is -- accused of: uploading the video.

Kordewiner and his flatmate told Gatestone about the raid, which took place at 6.45 a.m. They recounted that when they first refused to open the door, police forced it open -- and even searched the flatmate's room, although it was apparently not covered by the search warrant.

"The police officer said that he could also search for SD (secure digital) cards," the flatmate told Gatestone. "While he fumbled through the books on my shelf, he suggested that he could turn my whole apartment upside down. He told me to relax."

According to the search warrant, Kordewiner is accused of having "invaded the private sphere" of the murder victim, in breach of §201a of Germany's Criminal Code. This so-called "paparazzi paragraph" -- the legislation of which was launched by Heiko Maas (currently Germany's Foreign Minister), who as Minister of Justice was responsible for Germany's internet censorship law -- is a barely known and rarely applied law, passed in 2015. Among other things, it makes it illegal to take pictures that "display someone in a helpless situation." Supposedly aimed at protecting victims of traffic accidents from being filmed by curious onlookers, the law was already highly controversial when it was debated in 2014, and journalist associations criticized it for jeopardizing freedom of the press.

When the German parliament debated the law, one of the 10 experts invited to give their opinions on the matter was Ulf Bornemann, head of the "Hate and Incitement" department of Hamburg's public prosecution office. A former MP and member of the East German civil rights movement, Vera Lengsfeld, wrote at the time that Bornemann was the only one to embrace the law without reservations: "Why," she reported he had said, "should the data of a supposed inciter be protected?"

In a written statement, Bornemann praised the censorship law for sending "a clear political message that the administration is willing to act against hate crime in social networks." Bornemann was also part of the team that raided Kordewiner's apartment.

The stated reason for the raid -- a breach of privacy rights -- is flimsy. Only the victim's feet can be seen in the video, and even those for only a brief moment. As the daily newspaper Hamburger Abendblatt pointed out, the footage "is blurred, taken from a distance and doesn't allow the identification of any person."

Meanwhile, the German publication Welt online posted a video that shows close-up footage of the victim -- something that did not spur state prosecutors into action. The main difference between the two videos seems to be the verbal comment on the beheading in Daniel J's video. The alleged breach of "privacy rights," then, would appear to be a pretext.

The "Beheading"

"We don't comment on this rumor," state prosecutor Nana Frombach said to Gatestone when asked about the beheading. All she was willing to acknowledge was that the child had suffered "severe neck injuries." When Gatestone said that §201a could not be applied to the video in question because it did not show anybody's face, she replied that this had "yet to be decided," and that the raid was based on an "initial suspicion." Gatestone then mentioned that Kordewiner, instead of uploading the video anonymously (which would have been easy for him to do), had uploaded it to his YouTube channel, along with his full name and address, rendering the raid's stated goal of "finding evidence" not merely disproportionate but entirely unnecessary. Frombach said that she was not allowed to "comment on details of an ongoing investigation," but that she could "guarantee" that the search warrant had been "approved by a judge."

How can any journalist, under such censorship, report the news? Would it be illegal to film the scene of a terrorist attack? Frombach said that she could "not tell" whether this would still be legal in today's Germany. "I can only judge specific cases, not ones that lie in the future," she said.

The libertarian website Achse des Guten (Axis of the Good) was the first media outlet to report the raid. Two days later, the daily Hamburger Abendblatt wrote:

"Hamburg's state prosecutor rabidly prosecutes a blogger who has published pictures of the tragedy at Jungfernstieg... The raid was based on paragraph 201a, a law that the council of the press and journalist associations view as being problematic with regard to free reporting."

The Abendblatt criticized the "nebulous phrasing" of the law and the "even more nebulous interpretation by the state prosecutor," stating, "The law stipulates that no pictures of helpless persons may be taken. However, the cell phone footage does not show such persons."

According to the Abendblatt, sources "from within the security apparatus" had been "surprised" by the raids of the homes of the blogger and Daniel J. The state prosecutor who ordered the raids had been "very hot on this case," these sources said, and was "shooting out of cannons into sparrows... it is surprising how quickly the search warrant was issued, given the high obstacles we face every day, even when dealing with serious crime."

In an accompanying commentAbendblatt editor Matthias Iken called the raid "foolish," because "it supports the conspiracy theories of right-wingers." Where, he asked, "do the prohibitions start? And where do they stop?"

In the meantime, the incriminated video has been deleted from all German websites and YouTube channels (although it can still be found on websites that are out of reach of the German authorities).

Censorship Backfired

If it was indeed the authorities' plan to censor the news and keep the information of the beheading under wraps, then it backfired. Due to the reports about the raid, thousands of people have seen the video, and hundreds of thousands have heard about the botched censorship attempt. Even worse for the would-be censors, they unwittingly revealed the very detail that they wanted to keep from the public. This is because the search warrant -- a copy of which was handed to Kordewiner -- happens to provide a detailed account of the murders. It elaborates that Madou had "wanted to punish the mother of the child" and "enforce his claim to power and ownership." With an "intent to kill," Madou "suddenly" took a "knife from the backpack he was carrying, stabbed the child in the belly and then almost completely cut through the neck."

The office of the state prosecutor is under the authority of Hamburg's state government, a coalition of Social Democrats and the Green Party. The state's Minister of Justice, Till Steffen, is a member of the Green Party and has for years been accused of being behind many scandals in his ministry. Among these are that alleged murderers repeatedly have had to be released from pre-trial detentionbecause their trials have taken too long. In 2016, Steffen prevented police from sharing pictures of the Berlin truck terrorist, Anis Amri when he was still at large, out of fear that sharing images of jihadist terror suspects could incite racial hatred.

Censorship in Parliament

Hamburg's government is still trying to conceal the beheading. This became clear when, in May, MPs of the anti-immigration party Alternative for Germany (AfD) made a parliamentary enquiry about the police raid and details of the murder case. Among other things, they wanted to know whether the child had been beheaded. The administration -- in breach of its constitutional duty -- refused to answer. It also censored the questions by blacking out whole sentences. The newspaper Die Welt noted: "That the text of an enquiry and the questions are blackened out without consultation" is something "that almost never happens."

When Gatestone contacted Alexander Wolf, one of the MPs who made the enquiry, to find out what exactly was censored, he sent the original enquiry (the first two pages from the left) as well as the senate's answer (pages 3, 4 and 5) in which parts of the questions were censored. Every hint of a beheading that might have taken place was blacked out, as was the link to the article that first broke the news about the beheading and the subsequent police raid. Wolf told Gatestone:

"In the session of the interior committee, the Senator of the Interior and the responsible state prosecutor both replied very evasively to the repeated questions of our speaker, Dirk Nockemann, and imputed a lack of respect [for the murder victim]. In my opinion, this was designed to cause indignation against the enquirer on the part of the other MPs. Apparently, the Senator wants to sweep the issue under the rug."

The speakers of the other opposition parties were also contacted by Gatestone: Dennis Gladiator of the Christian-Democrats (CDU) and Anna von Treuenfels-Frowein of the centrist Free Democrat Party (FDP). Treuenfeld-Frowein replied:

"Of course, the public has a right to information. But for us as a party committed to the rule of law, personal rights do not end with death. We therefore consider the decision to black out parts of the enquiry to be appropriate. Right now, there is no need to make details of the crime public."

Gladiator did not respond to Gatestone's repeated requests for comment.

Why the beheading should be kept a secret is anyone's guess. What has become clear is how easily authorities in Germany can censor the news and punish bloggers who spread undesired information. They have a vast toolbox of laws at their disposal. It does not seem to bother them that the law invoked in this case stipulates explicitly that it shall not be applied to the "reporting of contemporary events." The state prosecutor, however, argues that this murder case – which was reported, among others, in FranceIndiaPakistanSouth Africa and the United States – does not constitute such a "contemporary event."

"For Hamburg's ministry of justice," the Abendblatt wrote, "the double murder is a crime of passion that must not be of any interest to the public."

Published:7/6/2018 4:24:43 AM
[Markets] The United States Of Terror

Authored by Antonius Aquinas via,

Two recent articles (here and here) have again demonstrated that the greatest “terrorist” entity on earth is not the boogeymen – Russia, China, Iran, North Korea – so often portrayed by Western presstitudes and the American government; but the United States itself!  Ever since World War II, the US has been the most militaristic, far surpassing all of the Communist and dictatorial regimes combined.

Some startling and rarely reported facts:

  • Currently, the US drops on someone or something a deadly explosive once every12 minutes

  • W. Bush’s military dropped 70,000 bombs on five different nations during his murderous regime

  • Nobel Peace Prize recipient, Barrack Obomber, launched 100,000 bombs on seven countries

  • Funding this mass murder is a reportedly $21 trillion (!) that is unaccounted for in the Pentagon’s coffers

Despite all of the “America First” bluster at the start of the Trump Administration, little has changed but, in fact, things have escalated.  While G.W. Bush in his wicked eight years dropped over 24 bombs per day and his successor upped that total to 34 bombs per day, the current Bomber-in-Chief has, in his first year in office, averaged 121 bombs per day!  For the initial year of his Presidency, 44,000 bombs were dropped on people and lands despite the fact that the US is not officially at war with a single country!

Despite these grisly statistics, which are hardly ever reported by the mainstream press, the military industrial complex and the controlled Western media outlets have propagated the lie of “precision bombing.”  Precision bombing has been trumpeted to minimize the effect of US aggression to the public that only true belligerents are targeted and not innocents.

When US bombing is reported by the press, the actual casualties and property damage are never accurately given.  The most notorious example of this mendacity was the coverage of Bush II’s Iraq war.  “The US and its allies ruthlessly carpet-bombed Iraq,” a UN report acknowledged, “reducing it from ‘a rather highly urbanized and mechanized society’ to a ‘pre-industrial age nation.’”

Later accounts of what actually happened showed that “only seven percent of the 88,500 tons of bombs and missiles devastating Iraq were ‘precision weapons.’”

Despite these facts, US policy makers have the gall to call certain regimes “rogue” and/or “terrorist.”  Do not look for any de-escalation, however, as “defense” spending for 2018 is set at $700 billion with an increase of $16 billion in the following year.  Yes, more taxes extorted from the public for the pulverization of peoples and their homes across the globe!

Even if these statistics were of common knowledge, do not look for things to change.  The majority of the American public loves its military and government and has been conditioned to overlook and accept nearly all of its military engagements and the propaganda that attempts to justify them.

What must change is ideology which, at one time, was strongly anti-interventionist, but gradually became pro-war.  Through education, the press, books, and the electronic media, the intelligentsia was able to manipulate public opinion.  Americans began to glorify war under the guise of spreading democracy and “freedom” to everyone, whether they wanted it or not.

Under current ideological conditions, a reversal of thinking to a non-interventionist foreign policy is not likely.  The only way that the nation’s rampaging foreign policy will be checked is through an economic collapse or a severe dollar crisis, the latter of which would end the greenback’s status as the world’s reserve currency.

If America no longer has the means to fund its military around the world, its imperialism will quickly come to an end.  It is extremely burdensome on a domestic economy to maintain a global empire and one that is actively engaged in costly military operations.  If the nation’s economy severely contracts or the dollar can no longer be printed with impunity, the bombing of other peoples and political involvement in overseas affairs would have to cease, or be drastically curtailed.  A historical example of this is Great Britain after WWII.

As it stands now, only financial calamity will bring down the world’s foremost terrorist state.  If such a scenario comes about, the US may become the recipient of the destruction, loss of life, and mayhem it has unleashed upon the world.

Published:7/5/2018 8:56:26 PM
[Markets] Paul Craig Roberts: "July 4th Is Matrix-Reinforcement Day"

Authored by Paul Craig Roberts,

July 4, 2018, is the 242 anniversary of the date chosen to stand as the date the 13 British colonies declared independence. According to historians, the actual date independence was declared was July 2, 1776, with the vote of the Second Continental Congress. Other historians have concluded that the Declaration of Independence was not actually signed until August 2.

For many living in the colonies the event was not the glorious one that is presented in history books. There was much opposition to the separation, and the “loyalists” were killed, confiscated, and forced to flee to Canada. Some historians explain the event not as a great and noble enterprise of freedom and self-government, but as the manipulations of ambitious men who saw opportunity for profit and power.

For most Americans today the Fourth of July is a time for fireworks, picnics, and a patriotic speech extolling those who “fought for our freedom” and for those who defended it in wars ever since. These are feel good speeches, but most of them make very little sense. Many of our wars have been wars of empire, seizing lands from the Spanish, Mexicans, and indigenous tribes. The US had no national interest in WW 1 and and very little in WW 2. There was no prospect of Germany and Japan invading the US. Once Hitler made the mistake of invading the Soviet Union, the European part of World War 2 was settled by the Red Army. The Japanese had no chance of standing up to Mao and Stalin. American participation was not very important to either outcome.

No Fourth of July orator will say this, and it is unlikely any will make reference to the seven or eight countries that Washington has destroyed in whole or part during the 21st century or to the US overthrow of the various reform governments that have been elected in Latin America. The Fourth of July is a performance to reinforce The Matrix in which Americans live.

When the Fourth of July comes around, I re-read the words of US Marine General Smedley Butler.

General Butler is the most highly decorated US officer in history. By the end of his career, he had received 16 medals, five for heroism. He is one of 19 men to receive the Medal of Honor twice, one of only three men to be awarded both the Marine Corps Brevet Medal and the Medal of Honor, and the only to be awarded the Brevet Medal and two Medals of Honor, all for separate actions.

Butler served in all officer ranks that existed in the US Marines of his time, from Second Lieutenant to Major General.

He said that “during that period, I spent most of my time being a high class muscle-man for Big Business, for Wall Street and for the Bankers. In short, I was a racketeer, a gangster for capitalism.”

Butler says he was a long time escaping from The Matrix and that he wishes “more of today’s military personnel would realize that they are being used by the owning elite as a publicly subsidized capitalist goon squad.”

Butler wrote:

“WAR is a racket. It always has been.

“It is possibly the oldest, easily the most profitable, surely the most vicious. It is the only one international in scope. It is the only one in which the profits are reckoned in dollars and the losses in lives.

“A racket is best described, I believe, as something that is not what it seems to the majority of the people. Only a small ‘inside’ group knows what it is about. It is conducted for the benefit of the very few, at the expense of the very many. Out of war a few people make huge fortunes.

A few profit — and the many pay. But there is a way to stop it. You can’t end it by disarmament conferences. You can’t eliminate it by peace parleys at Geneva. Well-meaning but impractical groups can’t wipe it out by resolutions. It can be smashed effectively only by taking the profit out of war.

“The only way to smash this racket is to conscript capital and industry and labor before the nation’s manhood can be conscripted. One month before the Government can conscript the young men of the nation — it must conscript capital and industry and labor. Let the officers and the directors and the high-powered executives of our armament factories and our munitions makers and our shipbuilders and our airplane builders and the manufacturers of all the other things that provide profit in war time as well as the bankers and the speculators, be conscripted — to get $30 a month, the same wage as the lads in the trenches get.”

In November, 1935, Butler wrote in Common Sense magazine:

“I spent 33 years and four months in active military service and during that period...

I helped make Mexico and especially Tampico safe for American oil interests in 1914.

I helped make Haiti and Cuba a decent place for the National City Bank boys to collect revenues in.

I helped in the raping of half a dozen Central American republics for the benefit of Wall Street.

I helped purify Nicaragua for the International Banking House of Brown Brothers in 1902–1912.

I brought light to the Dominican Republic for the American sugar interests in 1916.

I helped make Honduras right for the American fruit companies in 1903.

In China in 1927 I helped see to it that Standard Oil went on its way unmolested.

Looking back on it, I might have given Al Capone a few hints. The best he could do was to operate his racket in three districts. I operated on three continents.

The military/security complex, about which President Eisenhower warned Americans 57 years ago, adroitly uses the Fourth of July to portray America’s conflicts in a positive light in order to protect its power and profit institutionalized in the US government.

In stark contrast, by the end of his career General Butler saw it differently.

Washington has never fought for “freedom and democracy,” only for power and profit. Butler said that “there are only two things we should fight for. One is the defense of our homes and the other is the Bill of Rights.”

Today the anti-gun lobby and militarized police have made it very difficult to fight for the defense of our homes, and the War on Terror has destroyed the Bill of Rights. If there could be a second American revolution, maybe we could try again.

Published:7/4/2018 10:20:10 PM
[Markets] Bill Bonner Asks "Would The Founding Fathers Recognize Modern America?"

Authored by Bill Bonner via Bonner & Partners,

The metamorphosis of a caterpillar into a butterfly is one of the most remarkable things in nature. The animal apparently digests itself, using enzymes triggered by hormones. Then, from the pupa, a whole new animal develops – one with wings.

Time and growth produce changes in institutions, too. Sometimes, they merely get bigger and older. Sometimes, they go through a metamorphosis and change into something very different.

We recently moved back to France for the summer. We lived here for nearly 20 years… and still have a house in the country, to which we retire every summer.

Here, we find our old friends and acquaintances… our old clothes and shoes… our tools and workshop… our tractor… and our favorite office.

And what a pleasure… there, on the table next to the bed, was a copy of Michel De Jaeghere’s great book, Les Derniers Jours: La Fin de l’Empire Romain d’Occident (The Last Days: The End of the Roman Empire in the West).

We picked it up and found where we left off a year ago… page 321.

Roman Example

Many of the founders of the American Republic were readers and scholars. “I can’t live without books,” said Jefferson.

He, Monroe, Madison, Adams, and others were much more aware of Roman history than our leaders today. Most had studied Latin and/or Greek.

They had read Plutarch, Seneca, Sallust, Suetonius, and Cicero.

Much was known about the Roman era... and much was discussed. People believed they could learn from it and do better.

In the same year that the Declaration of Independence was adopted, Edward Gibbon published the first volume of his masterpiece, The History of the Decline and Fall of the Roman Empire.

The Founding Fathers were well aware of the transition – natural, and perhaps inevitable – from republic to empire. They had studied it in the Roman example. They had seen how it drew power into a few hands… and corrupted them.

They tried to prevent it from happening in the New World, putting in place limits… circuit breakers… and checks and balances… to keep the government from becoming too big, too ambitious, or too powerful.

Even then, they were doubtful that it would stick. “We give you a republic...” Franklin wrote to posterity, “if you can keep it.”

America did keep it... for nearly 100 years. Maybe a few more. Then, the metamorphosis occurred. And, like Rome, it was not very pretty.

Metamorphic Change

When a man has a wife, he has a more or less agreeable situation, depending on the circumstances. But if he has two wives, he doesn’t simply have twice as much wife. Or twice as much marriage. Or twice as much satisfaction. Or twice as much misery, such as the case may be. It is something altogether different.

Likewise, going to a small airport is very different from going to a large one. And a small, modest country has little in common with a big, aggressive, worldwide empire.

The point we have been making in our Diary is that time and scale have changed the nature, not just the age and the size, of the United States of America. It has become something the Founding Fathers had tried to avoid... and almost certainly wouldn’t like.

It was a metamorphic change, not just more of the same thing. But unlike Jesus, who turned water into wine... or nature, which turns an ugly caterpillar into a beautiful butterfly... the change from modest republic to aggressive empire was not necessarily for the better.

The Constitution was twisted into a new shape; like when an alcoholic chaperones a school party after he has had a few drinks, the kids can get away with anything.

The Bill of Rights, too, was run through the wringer. Citizens still have the right to life, liberty, and property – but only to the extent that the feds allow.

They can keep their firearms, for example, but under the Obama Doctrine, the feds can label them terrorists… and kill American citizens.

They still have the right to express themselves under the protection of the First Amendment, unless their opinions are considered “hate speech,” or the feds – or their agents at Facebook and Google – just don’t like what they say.

Your property is still safe, too; but under the doctrine of civil forfeiture, the police can take your money, your cars, and your house… with no due process of law.

Thus, were Americans mugged, mangled, and manacled. And then, the feds hit them in the face with a shovel.

Beginning in 2008, they distributed nearly $4 trillion to America’s wealthy stock- and bond-owners. Trillions more were taken from savers (most of us) by reducing interest rates… and given to big borrowers (corporations, Wall Street, and the feds themselves).

Is it any wonder that ordinary Americans are feeling a little testy?

Almost everything seems to be subject to the law of declining marginal utility. Power is no exception. And like desserts, wives, and shots of whiskey, it doesn’t take too long before the returns to additional power diminish so much that they are no longer positive.

They fall below the zero line. There, another drink is not merely useless, it could be fatal… and more power turns you into a Hell-bound bully.

Evolution of Power

That is the insight we’ve struggled to bring to light. As America evolved into an aging empire, it left behind it the laws, rules, customs, and instincts of its youth, much like Rome did after the death of Crassus in 53 BC.

The U.S. empire is now more than 100 years old. It began in the late 1890s, with the annexation of the Philippines. (Some people put the start date much earlier… when the North brought the South into imperial submission.)

Empires are very different from republics. They are no longer by, for, and of the people. They’re too big… too complex… with too many fingers in too many pies for the people or their elected representatives to keep up with.

So power migrates to the center. There, where the CIA, NSA, Pentagon, NIH, FBI, IRS, and dozens of other agencies… along with the corporate headquarters of hundreds of big industries… and thousands of pressure groups, lobbyists, factotums, hacks, think tanks, NGOs, powerful families, and apparatchiks reside, is where the real power flows.

There, too, in Rome as in Washington, the power congeals.

De Jaeghere... along with hundreds of other historians, ancient and modern... brings the process to light.

After reading them, reading the news today is almost like watching an old movie. We’ve seen it before, but we may still laugh… or shed a tear.

Published:7/4/2018 12:44:46 PM
[Markets] Britains Most Censored (Non-Military) Stories Exposed


In this article, we have attempted to identify the most censored stories of modern times in Britain. We have asked the opinions of one of the most famous and celebrated journalists and documentary film-makers of our time, a high-profile former Mi5 intelligence officer, an investigative journalist with one of the most well-known climate-change organisations, a veteran journalist of the Iraq war, an ex-army officer, along with the head of one of the worlds largest charities working against injustice.

One comment from our eclectic group of experts said; “the UK has the most legally protected and least accountable intelligence agencies in the western world so even in just that field competition is fierce, let alone all the other cover-ups.”

So true have we found this statement to be that we’ve had to split this article into two categories – military and non-military, with a view that we may well categorise surveillance and privacy on its own another time.

Without further ado – here are the most non-military censored stories in Britain since the 1980s, in no particular order. Do bear in mind that for those with inquisitive minds, some of these stories you will have read something about somewhere – but to the majority of citizens, these stories will read like conspiracy theories.

Consequences of American corporate influence over British welfare reforms

The demolition of the welfare state was first suggested in 1982 by the Conservative Prime Minister, Margaret Thatcher. Using neoliberal politics, every UK government since 1982 has covertly worked towards that goal. It is also the political thinking used as justification for the welfare reforms of the New Labour government, which introduced the use of the Work Capability Assessment (WCA) for all out-of-work disability benefit claimants. Neoliberal politics also justified additional austerity measures introduced by the Coalition government since 2010, and the Conservative government(s) since 2015, which were destined to cause preventable harm when disregarding the human consequences. Much of this is known and in the public domain.

However, what is less known is a story the government have tried very hard to gag. The American healthcare insurance system of disability denial was adopted, as was the involvement of a US healthcare company to distance the government from the preventable harm created by its use.  The private sector was introduced on a wide scale in many areas of welfare and social policy as New Labour adopted American social and labour market policies – and the gravity of its effects cannot be understated.

The result? In one 11 month study 10,600 deaths were attributed to the government disability denial system of screening, with 2,200 people dying before the ESA assessment was even completed. Between May 2010 and February 2014, an astonishing total of 40,680 people died within 12 months of going through a government Work Capability Assessment. The government department responsible has since refused to publish updated mortality totals.

This political and social scandal has been censored, with the author of THIS truly damning report in trouble with the government for publishing it.

Climate Change, what a British oil giant knew all along

For decades, tobacco companies buried evidence that smoking was deadly, the same goes for the fossil fuel industry. As early as 1981, big oil company Shell was aware of the causes and catastrophic dangers of climate change. In the 1980s it was acknowledging with its own research that anthropogenic global warming was a fact. Then, as the scientific consensus became more and more clear, it started introducing doubt and giving weight to a “significant minority” of “alternative viewpoints” as the full implications for the company’s business model became clear.

By the mid-90s, the company started talking about “distinguished scientists” that cast aspersions of the seriousness of climate change. THIS REPORT provides proof of Shell’s documentation including emails of what they knew and what they were hiding from the public domain. One document in 1988 confirms that: “By the time the global warming becomes detectable it could be too late to take effective countermeasures to reduce the effects or even stabilise the situation.

It was not until 2007 that scientific research eventually took a grip of the problem and proved what was known all along. However, as Shell did say – it’s probably too late to take effective countermeasures now anyway. There is still persistent quoting of climate science deniers by the fossil fuel industries.

Government Surveillance

In 2016, the UK was identified as the most extreme surveillance state in the Western world. However, legislation really only came about to legalise its use because of the Edward Snowden revelations in 2013. Prior to that, the British government had created a secret 360-degree mass surveillance architecture that no-one, including most members of parliament, knew anything about. And much of it has since been deemed illegal by the highest courts in both Britain and the European Union.

From operation Optic Nerve which took millions of sexually explicit images of an unknowing public through their devices to a hacking operation called Gemalto – where GCHQ stole the keys to a global encryption system with 700 million subscribers. The unaccountable spymasters of the UK have undertaken breathtaking operations of illegality with absolute impunity.

Some other programmes included; Three Smurfs – an operation to turn on any mobile device so it could listen to or activate the camera covertly on mobile phones. XKeyScore was basically a Google search engine for spies to find any data about anyone. Upstream and Tempora hacked into the worlds main cable highway, intercepting everything and anything globally with a leaked presentation slide from GCHQ on this programme expressly stating they were intent on “Mastering the Internet”. Royal Concierge identified diplomatic hotel reservations so GCHQ could organise a surveillance operation against dignitaries either domestic or foreign, in advance.

In truth, Britain is classed as an endemic surveillance state and right now, we only know what has been uncovered by whistleblowers. This is why people like Julian Assange, Edward Snowden and others are nothing less than political prisoners of Western governments. They don’t want you to know what they know about you. They also don’t want you to know about them, which is why the architecture is there in the first place. It is not for catching terrorists because if it was the courts would not deem these surveillance systems as illegal.

Evidence-Based Medical Studies

Over the last few years, medical professionals have come forward to share a truth that, for many people, proves difficult to swallow. One such authority is Dr. Richard Horton, the current editor-in-chief of the Lancet – considered to be one of the most well respected peer-reviewed medical journals in the world.

Dr. Horton recently released a statement declaring that a lot of published medical research is in fact unreliable at best, if not completely false.

“The case against science is straightforward: much of the scientific literature, perhaps half, may simply be untrue. Afflicted by studies with small sample sizes, tiny effects, invalid exploratory analyses, and flagrant conflicts of interest, together with an obsession for pursuing fashionable trends of dubious importance, science has taken a turn towards darkness.”

Across the pond,  Dr Marcia Angell, a physician and longtime Editor-in-Chief of the New England Medical Journal (NEMJ), which is also considered another one of the most prestigious peer-reviewed medical journals in the world, makes her view of the subject quite plain:

It is simply no longer possible to believe much of the clinical research that is published or to rely on the judgment of trusted physicians or authoritative medical guidelines.  I take no pleasure in this conclusion, which I reached slowly and reluctantly over my two decades as an editor of the New England Journal of Medicine”.

Many newspapers in Britain take the opportunity to indulge in some shameless click baiting and report completely false stories simply to gain visitor numbers onto their website – as in this example by the Mail Online HERE  or  HERE.

The Skripal poisoning and Pablo Millar

D-notice’s (Defence and Security Media Advisory Notice) are used by the British state to censor the publication of potentially damaging news stories. They are issued to the mainstream media to withhold publication of damaging information. One such case was the widespread use of D-notices regarding the British ex-spy deeply involved in the Skripal/Novichok poisoning case in Salisbury.

(Here are the official D-Notices to the Skripal Affair)

Mainstream journalists, the press and broadcast media were issued with D-notices in respect of a former British intelligence officer called Pablo Miller. Miller was an associate of Christopher Steele, first in espionage operations in Russia and more recently in the activities of Steele’s private intelligence firm, Orbis Business Intelligence.

Steele was responsible for compiling the Trump–Russia dossier, comprising 17 memos written in 2016 alleging misconduct and conspiracy between Donald Trump’s presidential campaign and the Putin administration. The dossier paid for by the Democratic Party, claimed that Trump was compromised by evidence of his sexual proclivities (golden shower anyone?) in Russia’s possession. Steele was the subject of an earlier D-notice, which unsuccessfully attempted to keep his identity as the author of the dossier a secret.

Millar is reported to be Skripal’s handler in Salisbury and if Miller and by extension, Skripal himself were involved in Orbis’ work on the highly-suspect Steele-Trump dossier, which is thought to be the case (for all sorts of reasons – including these D-notices) alongside representatives of British and possibly US intelligence, then the motivations for the attempted assassination on the ex-Russian double agent was very wide at best. As it turned out, blame could not be pinned on Russia’s intelligence service, the FSB, no matter how hard the government tried. This particular part of the Skripal poisoning story remains buried by the mainstream media.

The City of London – A global crime scene

For over a hundred years the Labour party tried in vain to abolish the City of London and its accompanying financial corruption. In 1917, Labour’s new rising star Herbert Morrison, the grandfather of Peter Mandelson made a stand and failed, calling it the “devilry of modern finance.” And although attempt after attempt was made throughout the following decades, it was Margaret Thatcher who succeeded by abolishing its opponent, the Greater London Council in 1986.

Tony Blair went about it another way and offered to reform the City of London in what turned out to be a gift from God. He effectively gave the vote to corporations which swayed the balance of democratic power away from residents and workers. It was received by its opponents as the greatest retrograde step since the peace treaty of 1215, Magna Carta. The City won its rights through debt financing in 1067, when William the Conqueror acceded to it and ever since governments have allowed the continuation of its ancient rights above all others.

The consequence? It now stands as money launderer of the world, the capital of global crime scene with Britain referred to by the global criminal fraternity to be the most corrupt country in the world.

A ‘watchman’ sits at the high table of parliament and is its official lobbyist sitting in the seat of power right next to the Speaker of the House who is “charged with ensuring that its established rights are safeguarded.” The job is to seek out political dissent that might arise against the City.

The City of London has its own private funding and will ‘buy-off’ any attempt to erode its powers – any scrutiny of its financial affairs are put beyond external inspection or audit. It has it’s own police force – and laws. Its dark and shadowy client list includes; terrorists, drug barons, arms dealers, despots, dictators, shady politicians, corporations, millionaires and billionaires  – most with something to hide. The shocking Panama Papers, Paradise Papers and Lux Leaks barely scratching the surface even with their almost unbelievable revelations of criminality.

Keith Bristow Director-General of the UK’s National Crime Agency said in June 2015 that the sheer scale of crime and its subsequent money laundering operations was “a serious strategic threat to Britain.” And whilst much of this activity is indeed published – the scale of it is not. It is now believed by many investigative journalists that the City of London is managing “trillions in ill-gotten gains” – not billions as we have all been told.

State propaganda – manipulating minds, controlling the internet

Reading this you would think this was the stuff of a conspiracy theory – sadly, it’s not. The government, through its spying agent GCHQ developed its own set of software tools to infiltrate the internet to shape what people see, hear and read, with the ability to rig online polls and psychologically manipulate people on social media. This was what Glenn Greenwald of The Intercept confirmed through the Snowden files in 2014. It was not about surveillance but about manipulating public opinion in ever more Orwellian ways.

These ‘tools’ now constitute some of the most startling methods of propaganda delivery systems and internet deception programmes known to mankind. What the Snowden files show are that the government can change the outcome of online polls (codenamed Underpass), send mass delivery of emails or SMS messages (Warpath) at will, disrupt video-based websites (Silverlord) and have tools to permanently disable PC accounts. They can amplify a given message to push a chosen narrative (GESTATOR), increase traffic to any given website” (GATEWAY) and have the ability to inflate page views on websites (SLIPSTREAM). They can crash any website (PREDATORS FACE), reduce page views and distort public responses, spoof any email account and telephone calls they like. Visitors to WikiLeaks are tracked and monitored as if an inquiring mind is now against the law.

Don’t forget, the government has asked no-one for permission to do any of this and none of this has been debated in parliament where representative democracy is supposed to be taking place. There is no protective legislation for the general public and no-one is talking about or debating these illegal programmes that taxpayers have been given no choice to fund – costing billions. This is government sponsored fake news and public manipulation programmes on a monumental scale.

Chris Huhne, a former cabinet minister and member of the national security council until 2012 said – “when it comes to the secret world of GCHQ, the depth of my ‘privileged information’ has been dwarfed by the information provided by Edward Snowden to The Guardian.”

The Guardian’s offices were then visited by MI5 and the Snowden files were ordered to be destroyedunder threats that if they didn’t, it would be closed down – a sign of British heavy-handedness reminiscent of the East-German Stasi.

Censorship – Spycatcher

‘Spycatcher’ was a truly candid autobiography of a Senior Intelligence Officer published in 1987. Written by Peter Wright, a former MI5 officer, it was published first in Australia after being banned by the British government in 1985. Its allegations proved too much for the authorities to allow it to be in the public domain.

In an interesting twist of irony, the UK government attempted to halt the book’s Australian publication. Malcolm Turnbull, current Prime Minister of Australia, was a lawyer at the time and represented the publisher that defeated the British government’s suppression orders against Spycatcher in Australia in September 1987, and again on appeal in June 1988. This is the same man that refuses to assist Julian Assange, an Australian citizen, from his hellhole existence in the Ecuadorian embassy in London.

The book details plans of the MI6 plot to assassinate Egyptian President Nasser during the Suez Crisis; of joint MI5-CIA plotting against British Prime Minister Harold Wilson and of MI5’s eavesdropping on high-level Commonwealth conferences. Wright also highlights the methods and ethics of the spying business.

Newspapers printed in England, attempting proper reportage of Spycatcher’s principal allegations were served gag orders. If they continued, they were tried for contempt of court. However, the book proved so popular many copies were smuggled into England. In 1987, the Law Lords again barred reportage of Wright’s allegations or sale of books.

The ruling was then overturned, but Wright was barred from receiving royalties from the sale of the book in the United Kingdom. In November 1991, the European Court of Human Rights ruled that the British government had breached the European Convention of Human Rights in gagging its own newspapers. The book has sold more than two million copies. In 1995, Wright died a millionaire from proceeds of his book.

Censorship – The Internet

To the inquisitive and knowledgeable, censorship of the internet by the British government is not news. In addition, there have been many reports, especially from independent outlets complaining about search engines and social media platforms censoring oppositional and dissenting voices.

Already described earlier in this article is the involvement of the authorities in strategies to manipulate public opinion and disseminate false narratives in their aims for control of the internet itself.

A few months ago, the government changed the law to block online content deemed as either pornographic or of an extremist nature to protect those under 16 years of age. It was anticipated that approximately 50 websites would be banned altogether. What subsequently happened was that thousands of websites disappeared from the internet with no court orders, injunctions, notices or justification. Even finding out which websites are on that list is a secret.

Over time, like many pieces of legislation that has been abused by the state, websites and online content that the government of the day does not like will have the perfect tool to simply press the ‘delete’ button, pretty much as they have already started doing.

On another, but related matter, just last week, The Independent had the headline: “Today’s vote will change the face of the internet forever, from an open platform to a place where anything can be removed without warning.” The articles first line reads; “The idea of instituting a regime of petty everyday censorship, that randomly and unfairly damages campaigns, artists and the denizens of the Internet, ought to fill you with rage.” This is how the state slowly takes control of what you read, see and hear.

In the meantime, Britain’s current Prime Minister has refused to rule out censoring the internet like China in future.

Dark Money Taking Power

Soon after the Second World War, some of America’s richest people began setting up a network of thinktanks to promote their interests. These purport to offer dispassionate opinions on public affairs. But they are more like corporate lobbyists, working on behalf of those who founded and fund them. These are the organisations now running much of the Trump administration. These same groups are now running much of Britain. Liam Fox and what was the Atlantic Bridge and the Adam Smith Institute are good examples.

They have control of the Conservative party and are largely responsible for years of work that steered Britain through the EU referendum that ended with Brexit. Tens of £millions have been spent, mostly undisclosed on making this dream to exploit Britain and its people a reality. In fact, almost everything in this article is about such organisations. Those hugely powerful individuals that own search engines and social media platforms along with the banking industry, the pharmaceutical and medical business, the fossil fuel and arms industries – they have reached a pinnacle of unprecedented corporate power.

Some of those fully censored stories pushed below the radar by these corporations include; how over 100,000 EU citizens die every year because of lobbying against workplace carcinogens, how corporate profits and taxes are hidden, the Tory-Trump plan to kill food safety with Brexit – to name but a few. And don’t forget the corporate media who are complicit. There are a handful of offshore billionaires that have the ability to decide what millions should read or see.

The Adam Smith Institute referred to earlier is a good example. It is a mouthpiece for right-wing extreme neoliberal capitalists. With a turnover of over £130 million and an operating profit of nearly £17 million, it has received millions of pounds in UK government funding. That is taxpayers money being used against taxpayers because the ASI does not believe in the likes of the NHS or civil society in general.

Talking of Dark Money – Brexit and the climate deniers

We recently reported about a transatlantic network of lobbyists pushing against action on climate change and (latterly) for Brexit? This group are all based out of one building around the corner from the Palace of Westminster.

The network is funded by shadowy elites in the UK and US and lobbies for rampant market deregulation while pushing the myth that climate change is a hoax.

What is much less known is that more recently, these groups have lobbied for a Hard Brexit, hoping the UK’s withdrawal from the EU will lead to a weakening of those environmental regulations that hinder future profits. These same groups are also behind the Tory-DUP pact, currently keeping Theresa May in her job while allowing hard-line Northern Irish social conservatives to dictate significant parts of the UK’s political agenda, themselves climate change deniers.

These are just some of Britain’s most censored stories. There are so many of them that we have had to categorise them, which says something about how democracy, free speech, civil liberty and human rights are performing in Britain right now.

Published:7/4/2018 4:08:04 AM
[Markets] Amazon's Fusion With The State Shows Neoliberalism's Drift To Neo-Fascism

Authored by Elliott Gabriel via,

In Part 1 of our investigative series on Surveillance Capitalism, MPN spoke to author Yasha Levine and Monthly Review editor John Bellamy Foster about the rise of the empire and its fusion with the U.S. state apparatus.

In our next installments, we will continue exploring the rise of Surveillance Capitalism and the implications of Amazon-fueled spying technology, both in the workplace and in U.S. city streets.

“Capitalism is a system that seeks to transgress all boundaries in its production and sale of commodities, commodifying everything in existence, which today, in the age of monopoly-finance capital and surveillance capitalism, means intruding into every aspect of existence,” John Bellamy Foster told MPN.

This year may go down in history as a turning-point when the world finally woke up to the dark side of the ubiquitous presence of popular Silicon Valley companies in our daily lives. One can only hope so, at least.

From Amazon to Facebook, Apple, Google, Microsoft and PayPal – among others – revelations poured out confirming the ongoing abuse of user data by monopolistic corporations, as well as their growing role as vendors of surveillance technology to the U.S. police state, military, and migrant detention agencies.

In March, the lid was blown off of the violation of user data on Facebook, with Cambridge Analytica mining user information for the purpose of providing millions of detailed “psychological profiles” to the Trump campaign, among others. Scarcely two weeks later, the Google campus was in an uproar over the development of its “Project Maven,” which was building an AI-fueled platform to vastly upgrade the automatic targeting abilities of the U.S. military’s global drone fleet. Faced with public outrage and internal dissent, the company pulled out of bidding to renew its Pentagon contract, which ends next year.

Now, employees and shareholders of – the world’s largest online marketer and cloud-computing provider – are demanding that chief executive Jeff Bezos halt the sale of its facial recognition or Amazon Web Services (AWS) Rekognition service to law enforcement agencies across the U.S., including to the Department of Homeland Security – Immigration and Customs Enforcement (DHS-ICE).

“As ethically concerned Amazonians, we demand a choice in what we build, and a say in how it is used,” the letter said. “We learn from history, and we understand how IBM’s systems were employed in the 1940s to help Hitler.

“IBM did not take responsibility then, and by the time their role was understood, it was too late,” it continued, referring to collusion with the operation of Nazi extermination camps during the Second World War. “We will not let that happen again. The time to act is now.”

Unveiled in November 2016 as a part of the AWS cloud suite, Rekognition analyzes images and video footage to recognize objects while providing analytics to users. It also lets clients “identify people of interest against a collection of millions of faces in near real-time, enabling use cases such as timely and accurate crime prevention,” according to promotional material. Law enforcement agencies like the Washington County Sheriff’s Department pay as little as $6 to $12 a month for access to the platform, giving deputies the ability to scan its mugshot database against real-time footage.

Amazon employees cited a report from the ACLU that notes that AWS Rekognition “raises profound civil liberties and civil rights concerns” owing to its “capacity for abuse.” Its uses could include monitoring protest activity, as well as the possibility that ICE could employ the technology to continuously track immigrants and advance its “zero tolerance” policy of detaining migrant families and children at the U.S.-Mexico border.

In the letter distributed on email list “we-won’t-build-it,”  Amazon employees lay out their opposition to their employer’s collusion with the police and the DHS-ICE migrant-capture and mass-incarceration regime:

We don’t have to wait to find out how these technologies will be used. We already know that in the midst of historic militarization of police, renewed targeting of Black activists, and the growth of a federal deportation force currently engaged in human rights abuses — this will be another powerful tool for the surveillance state, and ultimately serve to harm the most marginalized.”

The furor surrounding AWS Rekognition is hardly a revelation to journalist Yasha Levine. Instead, as is the case with Google and other flagship firms’ work for Washington, it’s just another chapter in Silicon Valley’s long-time integration into the repressive state apparatus.

“This isn’t so much a big step to some ‘Surveillance Apocalypse,’ it’s just an indication of where we’ve been for a long time,” Levine told MintPress News.

Yet the Amazon workers’ outrage was likely provoked by recent headlines highlighting the Trump administration’s separation of Central American migrant families at the concentration camps along the Southern border - along with the key role Amazon plays for ICE’s data “ecosystem,” crucial to the operation of ICE’s immigrant enforcement, mass incarceration, and removal regime.

In their letter, Amazon’s employees decried the role the company plays in the platform Palantir provides for ICE:

We also know that Palantir runs on AWS. And we know that ICE relies on Palantir to power its detention and deportation programs. Along with much of the world we watched in horror recently as U.S. authorities tore children away from their parents. Since April 19, 2018 the Department of Homeland Security has sent nearly 2,000 children to mass detention centers...

In the face of this immoral U.S. policy, and the U.S.’s increasingly inhumane treatment of refugees and immigrants beyond this specific policy, we are deeply concerned that Amazon is implicated, providing infrastructure and services that enable ICE and DHS.“

In 2014, ICE gave Palantir a $41 million contract for the Investigative Case Management (ICM) system, which expanded its capacity for data-sharing between the bureau and other agency databases including those of the FBI, the Drug Enforcement Administration, and the Bureau of Alcohol, Tobacco, Firearms and Explosives, among others. The contract allowed ICE to significantly boost its ability to capture and incarcerate unauthorized migrants based on the disparate data Palantir collated and hosted on Amazon Web Services’ servers.

Watch | Palantir 101

“What Amazon has simply done is allow everyone to lease that [Rekognition] capability the way that you would lease its web space, or have a pay-as-you-go plan with Amazon,” Levine commented.

In his new book, Surveillance Valley: The Hidden History of the Internet, Levine details the romance enjoyed between Big Data and the U.S. repressive state. In the introduction to his book, he notes :

From Amazon to eBay to Facebook — most of the Internet companies we use every day have also grown into powerful corporations that track and profile their users while pursuing partnerships and business relationships with major U.S. military and intelligence agencies. Some parts of these companies are so thoroughly intertwined with America’s security services that it is hard to tell where they end and the U.S. government begins.”

Having conquered retail and the internet, Amazon looks to the state and says “Forward”

President Barack Obama shakes hands with workers after speaking at the Amazon fulfillment center in Chattanooga, Tenn., July 30, 2013. Susan Walsh | AP

Conceived by founder Jeff Bezos as an “everything store” selling products from books to DVDs and music, Amazon has long been a scourge to the traditional brick-and-mortar marketplace, spending the late 1990s and the 2000s sweeping big and small booksellers alike into the ash-heap of retail history.

Amazon has now become the de facto store for everything in America –  it’s shocking to think about how much we buy from it and how much money we give away to it,” Levine said, adding that the company’s power as a business “is kind of depressing.”

The company has also become the world’s premier internet hosting firm through its Amazon Web Services cloud computing platform. From 2006 on, AWS played a similar role to’s retail platform in regard to small-fry-displacing traditional corporate data centers and information technology (IT) professionals, providing a previously unimaginable level of centralization in terms of data storage and IT functionality at a low cost. For some time even Dropbox found shelter under the AWS cloud.

Watch | and Jeff Bezos In 1999

The company’s success as the world’s biggest retailer and cloud computing service was closely related to Amazon’s surveillance efforts directed not only toward consumers, but against its huge and heavily-exploited employee workforce. As Levine detailed in his book:

[Amazon] recorded people’s shopping habits, their movie preferences, the books they were interested in, how fast they read books on their Kindles, and the highlights and margin notes they made. It also monitored its warehouse workers, tracking their movements and timing their performance.

Amazon requires incredible processing power to run such a massive data business, a need that spawned a lucrative side business of renting out space on its massive servers to other companies.”

In the 2012 U.S. presidential election, AWS software provided nearly all aspects of then-incumbent President Barack Obama’s reelection campaign software and big-data analysis, ranging from web management to mailing-list management, data modeling, volunteer dispatching, voter-information database maintenance and “massive transaction processing” for donations.

Watch | Obama for America on AWS

By early 2013, a secretive deal awarded Amazon a 10-year, $600-million contract to provide cloud services to the Central Intelligence Agency and the 17 agencies comprising the intelligence community.

Langley’s contract with such a commercially-oriented company as Amazon, rather than rival bidder IBM, sent shockwaves through the tech industry, but the company boasted that it reflected the “superior technology platform” it could provide to the CIA along with its ability to deliver “the confidence and security assurance needed for mission-critical systems.”

Amazon’s platform will soon be the venue for a major intelligence project by the CIA dubbed “Mesa Verde,” which will see the agency’s AWS-built C2S cloud software deployed in multiple experiments meant to parse thousands of terabytes of data, including public web data, using natural language processing tools, sentiment analysis, and data visualization.

According to a Bloomberg Government report in May, AWS is the only private cloud platform granted clearance to store agency information marked “Secret.”

Amazon’s CIA partnership: Surveillance Capitalism in action

Rev. Paul Benz, center, and Shankar Narayan, legislative director of the ACLU of Washington, right, stand with others as they wait to deliver petitions at Amazon headquarters, June 18, 2018, in Seattle. Representatives of community-based organizations urged Amazon at a news conference to stop selling its face surveillance system, Rekognition, to the government. They later delivered the petitions to Amazon. Elaine Thompson | AP

Amazon’s partnership with Langley is just another case of surveillance capitalism in action, according to sociology professor and author John Bellamy Foster, the editor of the venerable independent socialist journal Monthly Review.

Speaking to MintPress News, Foster explained:

Amazon now seems to be landing one contract after another with the military and intelligence sectors in the United States...

[The CIA cloud] is built on the premises of a private corporation, a kind of ‘walled castle’ for intelligence [spy] agency communication separate from the rest of the Internet, but principally operated by a for-profit corporation. Amazon also has a $1 billion contract with the Security and Exchange Commission, works with NASA, the Food and Drug Administration and other government agencies.”

In a 2014 essay for Monthly Review, Foster and Robert W. McChesney introduced the term surveillance capitalism in reference to the process of finance capital monetizing data extracted through surveillance operations performed in collusion with the state apparatus. The two trace the political-economic roots of the the data-driven Information Age from the early stages of the military-industrial complex to the 1950s fusion of consumer capitalism – corporations, ad agencies, and media – with the permanent warfare state, eventually leading to the birth of satellite technology, the internet, and the domination of a handful of monopolist tech firms during the present era of neoliberal globalization.

From the tech sector’s role in police-state operations to the expansion of “Smart” technology like Amazon’s Alexa into our homes, the use of drones and AI for keeping tabs on the entire population, and the manipulation of Facebook user data by the Trump campaign’s partnership with Cambridge Analytica, Foster is unequivocal in his judgment of surveillance capitalism’s metastasizing growth and its omniscient role in our daily lives:

The implications for the future are staggering.”

Not everyone shares Foster’s pessimistic perspective. To former CIA cybersecurity researcher John Pirc, the agency contract with Amazon represented the removal of a “clouded judgment”-based stigma over cloud computing security. Speaking to The Atlantic, Pirc commented:

You hear so many people on the fence about cloud, and then to see the CIA gobble it up and do something so highly disruptive, it’s kind of cool.”

Holy Disruption and the “Gale Force of Creative Destruction”

Creation, epiphany, genesis, prophecy, rapture, sacrifice, wrath; such sacred words pepper the Old and New Testaments and still carry divine significance for the faithful. Beloved by clergy and revered by the flock, such consecrated terms hardly apply to Apple’s bitten-fruit logo or Alexa’s profanely secular robotic voice.

But in today’s cult of high technology and the internet — where entrepreneurs like Steve Jobs and Mark Zuckerberg have been elevated to the level of prophets or pharaohs, and start-ups are evangelized at TED Talks as the panacea to problems ranging from physical fitness to refugee crises — a new ecclesiastical lexicon is used. Central to this pseudo-religion of Big Data is the phrase disruption, an oft-invoked term signifying the replacement of old markets and business models by new technological innovations.

As Silicon Valley pioneer, computer scientist, and critic Jaron Lanier noted in his 2013 book Who Owns the Future?:

The terminology of ‘disruption’ has been granted an almost sacred status in tech business circles...

To disrupt is the most celebrated achievement. In Silicon Valley, one is always hearing that this or that industry is ripe for disruption. We kid ourselves, pretending that disruption requires creativity. It doesn’t. It’s always the same story.”

For Lanier – a fervent defender of capitalism —  the D-word is misused to convey the liberating potential of new technology, when in fact the reign of big tech firms has led to a shrunken market dominated by “a small number of spying operations in omniscient positions.” Thus the digital landscape has become the fiefdom of monopoly firms who exercise an iron grip on competitors and Big Data’s primary commodities – internet users and their data.

To Foster, this process is little more than neoliberalism – the prevailing capitalist ideology dictating the unimpeded control over all aspects of public life by finance capital and the market. Foster notes that neoliberal orthodoxy is rooted in the concept of creative destruction, the concept from which the “disruption” buzzword is derived.

Creative destruction was introduced in 1942 by Austrian-American economist Joseph Schumpeter to describe a process of constant change under capitalism, whereby emerging entrepreneurs act as “innovation powerhouses” through a “perennial gale of creative destruction” that disorganizes and displaces competition, reshapes global markets, and paves the way to an emergence of new monopolies such as, for example, Silicon Valley’s leading firms.

Watch | Greenspan on Schumpeter’s “Creative Destruction”

“One of the key components of neoliberal ideology has been the opening up of the system to the unrestricted growth of monopolistic corporations and monopoly power,” Foster said to MintPress News, adding:

The neoliberal age has thus seen one of the greatest periods of growth of monopoly power, particularly in the cyber or digital realm, in all of history. If you take Google, Amazon, and Facebook, none of them even existed 25 years ago, and Facebook didn’t exist 15 years ago. Amazon had a 51 percent increase in market capitalization between 2016 and 2017 alone. These are giant monopolistic enterprises.”

Continuing, Foster explained:

In general, capitalism is a system that seeks to transgress all boundaries in its production and sale of commodities, commodifying everything in existence — which today, in the age of monopoly-finance capital and surveillance capitalism, means intruding into every aspect of existence as a means of manipulating not only the physical world, but also the minds and lives of everyone within it. It is this that constitutes the heart of surveillance capitalism.

But this same system of monopoly-finance capital has as its counterpart a growing centralization of power and wealth, increasing monopoly control, expanding militarism and imperialism, and an expansion of police power. It is what the political theorist Sheldon Wolin called ‘inverted totalitarianism,’ the growth of totalizing control of the population, and the destruction of human freedom under the mask of an ideology of individualism.”

As Amazon now approaches its 25-year anniversary, Foster notes, it’s become “a vast cultural (or anti-cultural) commodity empire” – and its ownership of The Washington Post has made clear the monopoly firm’s fusion with the state apparatus of U.S. imperialism.

Amazon clutches the “Newspaper of Record,” or “Democracy Dies in Darkness”

The front page of the Washington Post is displayed outside the Newseum in Washington, , 2013, a day after it was announced that founder Jeff Bezos bought the Washington Post for $250 million. Evan Vucci | AP

Since Jeff Bezos bought The Washington Post in 2013 for $250 million, the leading newspaper of the U.S. capital has stood at the ramparts of Fortress Amazon. Beyond any elite squadron of lobbyists or contracts with the Homeland Security or National Security State, the newspaper’s influential role shaping public and policymaker opinion gives Jeff Bezos and his fellow Amazon executives unparalleled access to the halls of imperial power.

“Of course it’s a problem when a powerful, monopolistic business like this with a very controlling owner is in the media business as well,” Yasha Levine commented, adding:

Let’s be honest, Amazon is a major CIA contractor now, and now this major contractor owns one of the most important newspapers in the country – which also happens to report on the CIA and national security issues.”

Since President Donald Trump came to power last January, “Amazon Washington Post” has been the target of the former reality-TV star’s ire as a top example of “fake news media.” While many of Trump’s attacks on the Post have been his standard Twitter outbursts against legitimate journalistic scrutiny, the newspaper once celebrated for publishing the groundbreaking 1971 Pentagon Papers is now both a bully pulpit for the president’s detractors in the Beltway liberal “resistance” and a mouthpiece of an aggressively neoliberal wing of the U.S. establishment.

“The Washington Post was always a liberal-capitalist paper, an arbiter of capitalist ideology and a defender of U.S. empire, [but] it has now become, as part of the Bezos empire, something worse,” Foster observed.

Scarcely a day passes without the Post publishing a torrent of stories seeking to expose “Russian interference” favoring Trump through social media or “fake news.” Citing the “experts” in “nonpartisan” media criticism group PropOrNot, the Post has smeared MintPress News and publications like Black Agenda Report, CounterPunchand Truthout as propaganda platforms tied to the Kremlin without citing so much as a shred of evidence. Through its de facto blacklist, the group has also attempted to tie disparate independent media organizations to hard-right and white-supremacist outlets like Alex Jones’ Infowars and neo-Nazi website The Daily Stormer.

Watch | WaPo refuses to add disclosure about $600M CIA contract

The Washington Post has generally waged what amounts to an ideological war on basic progressive causes, Foster explained:

It recently ran an article describing the ‘far left’ as those who believed in single-payer health insurance or protecting national parks, as if even these traditional left-liberal causes were now far outside the range of acceptable political discourse — a stance clearly designed to ratchet the political discourse further to the right. Bezos and Amazon are simply symbols of this social retrogression, as is the current autocrat in the White House.

To Levine, the trend – like the ownership of muckraking news website The Intercept by billionaire Silicon Valley entrepreneur and eBay co-founder Pierre Omidyar — goes beyond the Post alone. Levine commented:

It’s a larger issue of Silicon Valley coming into its own, and businesses built on top of the internet dominating business; and if you dominate business, you dominate society and news media coverage – that’s just the way things work.

Foster agrees, and minces no words depicting the danger Amazon’s growing power in U.S. society represents:

Democracy can be judged in various ways, but no definition of democracy – no matter how specious – is consistent with a society in which such vast class and monopoly power exist, and where the infrastructure of genuine democracy (education, communications, science, culture, public discourse, means of public protest) is demolished.

For this and other reasons, U.S. society and much of the capitalist world is shifting from neo-liberalism to something better described as neo-fascism.”

In our next installments, we will continue exploring the rise of Surveillance Capitalism and the implications of Amazon-fueled spying technology, both in the workplace and in U.S. city streets.

Published:7/3/2018 9:35:00 PM
[World] BOOK REVIEWS: 'Spymasters' by Brad Thor


By Brad Thor

Atria/Emily Bestler Books, $27.99, 336 pages

You can be certain that a thriller is going to be a great read if it's by Brad Thor. He has long been the best of the best in the genre and keeps getting better and better.

Without question, "Spymaster" ... Published:7/3/2018 7:04:16 PM

[Markets] Washington Has 'Weaponized' Keynesianism

Authored by William Hartung via,

Other than shouting about building a wall on the U.S.-Mexico border, one of Donald Trump’s most frequently proclaimed promises on the 2016 campaign trail was the launching of a half-trillion-dollar plan to repair America’s crumbling infrastructure (employing large numbers of workers in the process). Eighteen months into his administration, no credible proposal for anything near that scale has been made. To the extent that the Trump administration has a plan at all for public investment, it involves pumping up Pentagon spending, not investing in roads, bridges, transportation, better Internet access, or other pressing needs of the civilian economy.

Not that President Trump hasn’t talked about investing in infrastructure. Last February, he even proposed a scheme that, he claimed, would boost the country’s infrastructure with $1.5 trillion in spending over the next decade. With a typical dose of hyperbole, he described it as “the biggest and boldest infrastructure investment in American history.”

Analysts from the Wharton School at the University of Pennsylvania -- Trump’s alma mater -- beg to differ. They note that the plan actually involves only $200 billion in direct federal investment, less than one-seventh of the total promised. According to Wharton’s experts, much of the extra spending, supposedly leveraged from the private sector as well as state and local governments, will never materialize. In addition, were such a plan launched, it would, they suggest, fall short of its goal by a cool trillion dollars. In the end, the spending levels Trump is proposing would have “little to no impact” on the nation’s gross domestic product. To add insult to injury, the president has exerted next to no effort to get even this anemic proposal through Congress, where it’s now dead in the water.

There is, however, one area of federal investment on which Trump and the Congress have worked overtime with remarkable unanimity to increase spending: the Pentagon, which is slated to receive more than $6 trillion over the next decade. This year alone increases will bring total spending on the Pentagon and related agencies (like the Department of Energy where work on nuclear warheads takes place) to $716 billion. That $6-trillion, 10-year figure represents more than 30 times as much direct spending as the president’s $200 billion infrastructure plan.

In reality, Pentagon spending is the Trump administration’s substitute for a true infrastructure program and it’s guaranteed to deliver public investments, but neglect just about every area of greatest civilian need from roads to water treatment facilities.

The Pentagon’s Covert Industrial Policy

One reason the Trump administration has chosen to pump money into the Pentagon is that it’s the path of least political resistance in Washington. A combination of fear, ideology, and influence peddling radically skews “debate” there in favor of military outlays above all else. Fear -- whether of terrorism, Russia, China, Iran, or North Korea -- provides one pillar of support for the habitual overfunding of the Pentagon and the rest of the national security state (which in these years has had a combined trillion-dollarannual budget). In addition, it’s generally accepted in Washington that being tagged “soft on defense” is the equivalent of political suicide, particularly for Democrats. Add to that the millions of dollars spent by the weapons industry on lobbying and campaign contributions, its routine practice of hiring former Pentagon and military officials, and the way it strategically places defense-related jobs in key states and districts, and it’s easy to see how the president and Congress might turn to arms spending as the basis for a covert industrial policy.

The Trump plan builds on the Pentagon’s already prominent role in the economy. By now, it’s the largest landowner in the country, the biggestinstitutional consumer of fossil fuels, the most significant source of funds for advanced government research and development, and a major investor in the manufacturing sector. As it happens, though, expanding the Pentagon’s economic role is the least efficient way to boost jobs, innovation, and economic growth.

Unfortunately, there is no organized lobby or accepted bipartisan rationale for domestic funding that can come close to matching the levers of influence that the Pentagon and the arms industry have at their command. This only increases the difficulty Congress has when it comes to investing in infrastructure, clean energy, education, or other direct paths toward increasing employment and economic growth.

Former congressman Barney Frank once labeled the penchant for using the Pentagon as the government’s main economic tool “weaponized Keynesianism” after economist John Maynard Keynes’s theory that government spending should pick up the slack in investment when private-sector spending is insufficient to support full employment. Currently, of course, the official unemployment rate is low by historical standards. However, key localities and constituencies, including the industrial Midwest, rural areas, and urban ones with significant numbers of black and Hispanic workers, have largely been left behind. In addition, millions of “discouraged workers” who want a job but have given up actively looking for one aren’t even counted in the official unemployment figures, wage growth has been stagnant for years, and the inequality gap between the 1% and the rest of America is already in Gilded Age territory.

Such economic distress was crucial to Donald Trump’s rise to power. In campaign 2016, of course, he endlessly denounced unfair trade agreements, immigrants, and corporate flight as key factors in the plight of what became a significant part of his political base: downwardly mobile and displaced industrial workers (or those who feared that this might be their future fate).

The Trump Difference

Although insufficient, increases in defense manufacturing and construction can help areas where employment in civilian manufacturing has been lagging. Even as it’s expanded, however, defense spending has come to play an ever-smaller role in the U.S. economy, falling from 8%-10% of the gross domestic product in the 1950s and 1960s to under 4% today. Still, it remains crucial to the economic base in defense-dependent locales like southern California, Connecticut, Georgia, Massachusetts, Michigan, Missouri, Ohio, Pennsylvania, Texas, Virginia, and Washington state. Such places, in turn, play an outsized political role in Washington because their congressional representatives tend to cluster on the armed services, defense appropriations, and other key committees, and because of their significance on the electoral map.

A long-awaited Trump administration “defense industrial base” study should be considered a tip-off that the president and his key officials see Pentagon spending as the way to economincally prime the pump. Note, as a start, that the study was overseen not by a defense official but by the president’s economics and trade czar, Peter Navarro, whose formal title is White House director of trade and industrial policy. A main aim of the study is to find a way to bolster smaller defense firms that subcontract to giants like Boeing, Raytheon, and Lockheed Martin.

Although Trump touted the study as a way to “rebuild” the U.S. military when he ordered it in May 2017, economic motives were clearly a crucial factor. Navarro typically cited the importance of a “healthy, growing economy and a resilient industrial base,” identifying weapons spending as a key element in achieving such goals. The CEO of the Aerospace Industries Association, one of the defense lobby’s most powerful trade groups, underscored Navarro’s point when, in July 2017, he insisted that “our industry’s contributions to U.S. national security and economic well-being can’t be taken for granted.” (He failed to explain how an industry that absorbs more than $300 billion per year in Pentagon contracts could ever be “taken for granted.”)

Trump’s defense-industrial-base policy tracks closely with proposals put forward by Daniel Goure of the military-contractor-funded Lexington Institute in a December 2016 article titled “How Trump Can Invest in Infrastructure and Make America Great Again.” Goure’s main point: that Trump should make military investments -- like building naval shipyards and ammunition plants -- part and parcel of his infrastructure plan. In doing so, he caught the essence of the arms industry’s case regarding the salutary effects of defense spending on the economy:

“Every major military activity, whether production of a new weapons system, sustainment of an existing one or support for the troops, is imbedded in a web of economic activities and supports an array of businesses. These include not only major defense contractors such as Lockheed Martin, Boeing, General Dynamics, and Raytheon, but a host of middle-tier and even mom-and-pop businesses. Money spent at the top ripples through the economy. Most of it is spent not on unique defense items, but on products and services that have commercial markets too.”

What Goure’s analysis neglects, however, is not just that every government investment stimulates multiple sectors of the economy, but that virtually any other kind would have a greater ripple effect on employment and economic growth than military spending does. Underwritten by the defense industry, his analysis is yet another example of how the arms lobby has distorted economic policy and debate in this country.

These days, it seems as if there’s nothing the military won’t get involved in. Take another recent set of “security” expenditures in what has already become a billion-dollar-plus business: building and maintaining detention centers for children, mainly unaccompanied minors from Central America, caught up in the Trump administration’s brutal security crackdown on the U.S.-Mexico border. One company, Southwest Key, has already receiveda $955 million government contract to work on such facilities. Among the other beneficiaries is the major defense contractor General Dynamics, normally known for making tanks, ballistic-missile-firing submarines, and the like, not ordinarily ideal qualifications for taking care of children.

Last but not least, President Trump has worked overtime to tout his promotion of U.S. arms sales as a jobs program. In a May 2018 meeting with Saudi Crown Prince Mohammed bin Salman at the White House (with reporters in attendance), he typically brandished a map that laid out just where U.S. jobs from Saudi arms sales would be located. Not coincidentally, many of them would be in states like Pennsylvania, Michigan, Ohio, and Florida that had provided him with his margin of victory in the 2016 elections. Trump had already crowed about such Saudi deals as a source of “jobs, jobs, jobs” during his May 2017 visit to Riyadh, that country’s capital. And he claimed on one occasion -- against all evidence -- that his deals with the Saudi regime for arms and other equipment could create “millions of jobs.”

The Trump administration’s decision to blatantly put jobs and economic benefits for U.S. corporations above human rights considerations and strategic concerns is likely to have disastrous consequences. Its continued sales of bombs and other weapons to Saudi Arabia and the United Arab Emirates, for example, allows them to go on prosecuting a brutal war in Yemen that has already killed thousands of civilians and put millions more at risk of death from famine and disease. In addition to being morally reprehensible, such an approach could turn untold numbers of Yemenis and others across the Middle East into U.S. enemies -- a high price to pay for a few thousand jobs in the arms sector.

Pentagon Spending Versus a Real Infrastructure Plan

While the Trump administration’s Pentagon spending will infuse new money into the economy, it’s certainly a misguided way to spur economic growth. As University of Massachusetts economist Heidi Garrett-Peltier has demonstrated, when it comes to creating jobs, military spending lags far behind investment in civilian infrastructure, clean energy, health care, or education. Nonetheless, the administration is moving full speed ahead with its military-driven planning.

In addition, Trump’s approach will prove hopeless when it comes to addressing the fast-multiplying problems of the country’s ailing infrastructure. The $683 billion extra that the administration proposes putting into Pentagon spending over the next 10 years pales in comparison to the trillions of dollars the American Society of Civil Engineers claims are needed to modernize U.S. infrastructure. Nor will all of that Pentagon increase even be directed toward construction or manufacturing activities (not to speak of basic infrastructural needs like roads and bridges). A significant chunk of it will, for instance, be dedicated to paying the salaries of the military’s massive cadre of civilian and military personnel or health care and other benefits.

In their study, the civil engineers suggest that failing to engage in a major infrastructure program could cost the economy $4 trillion and 2.5 million jobs by 2025, something no Pentagon pump-priming could begin to offset. In other words, using the Pentagon as America’s main conduit for public investment will prove a woeful approach when it comes to the health of the larger society.

One era in which government spending did directly stimulate increased growth, infrastructural development, and the creation of well-paying jobs was the 1950s, a period for which Donald Trump is visibly nostalgic. For him, those years were evidently the last in which America was truly “great.” Many things were deeply wrong with the country in the fifties -- from rampant racism, sexism, and the denial of basic human rights to McCarthyite witch hunts -- but on the economic front the government did indeed play a positive role.

In those years, public investment went far beyond Pentagon spending, which President Dwight Eisenhower (of “military-industrial complex” fame) actually tried to rein in. It was civilian investments -- from the G.I. Bill to increased incentives for housing construction to the building of an interstate highway system -- that contributed in crucial ways to the economic boom of that era. Whatever its failures and drawbacks, including the ways in which African-Americans and other minorities were grossly under-represented when it came to sharing the benefits, the Eisenhower investment strategy did boost the overall economy in a fashion the Trump plan never will.

The notion that the Pentagon can play a primary role in boosting employment to any significant degree is largely a myth that serves the needs of the military-industrial complex, not American workers or Donald Trump’s base. Until the political gridlock in Washington that prevents large-scale new civilian investments of just about any sort is broken, however, the Pentagon will continue to seem like the only game in town. And we will all pay a price for those skewed priorities, in both blood and treasure.

Published:7/2/2018 7:59:46 PM
[Amazon] No ‘Trump Bump’ for Pro-POTUS Authors—Sean Spicer Is the Latest to Fizzle Only books that Trump tweets against become bestsellers. Published:7/2/2018 2:25:26 PM
[Politics] Republicans See Successful Presidency for Trump

For Republicans, Donald Trump’s presidency will go down in the record books as a successful one. But for Democrats, Trump's time in the White House won't be praised.

A new Rasmussen Reports national telephone and online survey finds that 36% of Likely U.S. Voters believe Trump’s presidency is more likely to be a success, while 46% think it’s more likely to be a failure. Seventeen percent (17%) feel it will fall somewhere in between. (To see survey question wording, click here.)

(Want a free daily e-mail update? If it's in the news, it's in our polls). Rasmussen Reports updates are also available on Twitter or Facebook.

The survey of 1,000 Likely U.S. Voters was conducted on June 25-26, 2018 by Rasmussen Reports. The margin of sampling error is +/- 3 percentage points with a 95% level of confidence. Field work for all Rasmussen Reports surveys is conducted by Pulse Opinion Research, LLC. See methodology.

Published:7/2/2018 7:25:49 AM
[Markets] Notorious French Gangster Flees Paris Jail In Dramatic Helicopter Escape

A notorious gangster who was once France’s most wanted, has pulled off an epic jailbreak, escaping from prison by helicopter, according to the Telegraph.

Rédoine Faïd, 46, was flown out of the Réau prison located in Paris’ south-eastern suburbs on Sunday, aided by two heavily armed men, local police said.  A Belgium-registered helicopter landed in the courtyard of the prison, believed to be the only spot not protected by a net, sources told Reuters.

Faid was being visited by his brother in prison when the men burst into the room on Sunday morning and extracted him. A third man waited in the helicopter in the prison courtyard to watch over the pilot, a flying instructor whose aircraft the men hijacked in a nearby airfield and whom they forced to take part in the dramatic operation.

A union representative at Reau told BFM television that "two men dressed in black, wearing balaclavas and police armbands" entered the prison to look for Faid and used a grinding machine to cut open the door that directly leads to the visiting room.

Le Monde newspaper reported the gunmen took about two minutes to remove Faïd from the prison. The helicopter that was used for the daring escape flew across the Paris region from the jail southeast of the capital, before being dumped not far from Charles de Gaulle airport to the northeast of the city. 

The aircraft was then set alight but was only partly damaged and the fire was extinguished when police found it a short time later. Media reports said the pilot had been released and was not injured.

Hours later, the gangsters remained on the run, with a massive manhunt underway across the country.

Gunman and  Faïd abandoned this helicopter after fleeing from Réau prison in Seine-et-Marne. (Source: AFP/Daily Mirror)

According to The Telegraph, the courtyard it landed in was the only one not fitted with anti-helicopter nets as it is used by inmates only when they are being admitted or released from the jail.

Spectacular helicopter jailbreaks became a regular embarrassment for French penal authorities until the late 2000s, but have petered out since prisoner exercise yards in most jails were equipped with nets to prevent choppers from landing.

Front view of the burned-out helicopter. (Source: AFP/Daily Mirror)

After the helicopter that flew Faid out of jail was torched, its occupants fled by car in a black Renault Megane which they later dumped in the underground car park of a shopping centre near the airport.

They switched to a white van with the company name Enedis marked on the vehicle. A huge manhunt has been launched to track them down. All police and gendarme units across Paris were put on alert and ordered to set up checkpoints that “take into account the dangerousness of the fugitive and his possible accomplices.”

The helicopter was found 40 miles from the prison. (Source: AFP/Daily Mirror) 

Faid’s brother, who was visiting him at the jail, has been taken into custody for questioning.

French authorities investigate the site where the helicopter landed. (Source: AFP/Daily Mirror)

Réau prison, where gunmen used a helicopter to extract Faïd. (Source: AFP/Daily Mirror)

It was the second time Faïd had pulled off such a daring jailbreak – in 2013, he took four correctional officers hostage and used small explosives to blast open doors and gates to make his great escape. He was then captured six weeks later on the outskirts of Paris.

Faid, who has said he was inspired by US films such as "Scarface" and "Heat", was serving a 25 year prison sentence for his role in the 2010 hold-up of a cash-transport van in the Paris area, in which a 26-year-old policewoman was killed. She was shot as the gang fled and used kalashnikov assault rifles to fire at police cars pursuing them along the busy A4 motorway.

Two members of the gang are currently serving lengthy jail sentences for her murder.

Faid has made several television appearances and co-authored two books about his delinquent youth and rise as a criminal in the Paris suburbs.  In one of those published in 2010 he claimed he had given up his life of crime.

Prior to the 2010 robbery, he had been released from a previous stint of a decade behind bars after convincing parole officials that he regretted his criminal past and was determined to start afresh.

* * *

France Bleu, a local broadcaster in France, provides Faïd’s timeline of crime:

1995 – First robbery

At 23, Redoine Faïd shoots a BNP agency in his hometown of Creil (Oise), taking hostage the family of the director of the bank .

1996-1998 – Braking and sentencing

In 1996, he directs a computer company Evry. The following year, he attacked an armored van in Villepinte and was arrested in 1998 . He is sentenced to 18 years of criminal imprisonment.

2010 – Redoine the repented

In 2009, Redoine Faïd presents himself as a repentant after receiving a conditional release . He publishes a book “Robber, cities to crime” and promotes it in the media.

June 2011 – The death of Aurélie Fouquet

Arrest in Villeneuve-d’Ascq. Redoine Faïd is suspected of being the brain of the attempted robbery of Villiers-sur-Marne in May 2010 when the municipal police Aurélie Fouquet, 26, is shot.

April 13, 2013 – The first escape

Redoine Faïd escapes from the Sequedin prison near Lille (North) in a spectacular way: he detonates several prison gates and takes four people hostage. He was arrested in a hotel in Seine-et-Marne on May 29, 2013.

April 14, 2016 – Conviction for the murder of Aurélie Fouquet

Redoine Faïd was first sentenced by the Paris Assize court to 18 years in prison for the murder of the municipal policewoman, Aurélie Fouquet, in June 2011. On appeal, he finally received 25 years’ imprisonment , conviction pronounced quite recently, in April 2018.

2017 – Convictions for a robbery and his first escape

In March 2017, Redoine Faïd was sentenced to 10 years in prison for his escape from Sequedin prison in 2013. He was shot a few months later, in October 2017, 18 years in prison for the robbery of an armored van in the Pas-de-Calais in 2011.

Published:7/1/2018 3:20:05 PM
[Markets] The Venus Flytrap Of Western Civilization: Entitlements

Authored by John Mauldin via,

In describing the global debt train wreck these last few weeks, I’ve discovered a common problem. Many of us define “debt” way too narrowly.

A debt occurs when you receive something now in exchange for a promise to give something back later. It doesn’t have to be cash. If you borrow your neighbor’s lawn mower and promise to return it next Tuesday, that’s a kind of debt. You receive something (use of the lawn mower) and agree to repayment terms – in this case, your promise to return it on time and in working order.

One reason you try to get that lawnmower back on time and in the proper condition is that you might want to borrow it again in the future. In the same way that not paying your bank debt will make it difficult to get a bank loan in the future, not returning that lawnmower may make your neighbor a tad bit reluctant to lend it again.

Debt can be less specific, too. Maybe, while taking your family on a beach vacation, you notice a wedding taking place. Your 12-year-old daughter goes crazy about how romantic it is. In a moment of whimsy, you tell her you will pay for her tropical island beach wedding when she finds the right guy. That “debt,” made as a loving father to delight your daughter, gets seared into her brain. A decade later, she does find Mr. Right, and reminds you of your offer. Is it a legally enforceable debt? Probably not, but it’s at least a (now) moral obligation. You’ll either pay up or face unpleasant consequences. What is that, if not a debt?

These are small examples of “unfunded liabilities.” They’re non-specific and the other party may never demand payment… but they might. And if you haven’t prepared for that possibility, you may be in the same kind of trouble the US government will face in a few years.

Uncle Sam has made too many promises to too many people, with little regard for its future ability to fulfill them. These are debt. Worse, some of them are additional debt on top of the obligations we already see on the national balance sheet.

Even worse, entire generations have planned their retirement lives around the government fulfilling those promises. If those promises aren’t met, their lifestyles will indeed become a potential train wreck.

That will be our topic today as we continue my Train Wreck series. This will be chapter 8. If you’re just joining us, here are links to prior installments.

In the coming weeks we’ll summarize the train wreck series and then shift the discussion to how you can prepare. But first, I want to leave no doubt about how big this problem is.

Assumptions Everywhere

Let’s start with what we know. The official, on-the-books federal debt is currently about $21.2 trillion, according to the US National Debt Clock. I say “about” cautiously because decimal points really matter when the numbers are this large. The difference between $21.1T and $21.2T is $100 billion. That used to be a lot. Now it’s a rounding error.

Anyway, $21.2T is the face amount of all outstanding Treasury paper, including so-called “internal” debt. This is about 105% of GDP and it’s only the federal government. If you add in state and local debt, that adds another $3.1 trillion to bring total government debt in the US to $24.3 trillion or more than 120% of GDP. Then there’s corporate debt, home mortgages, credit cards, student loans, and more. Add it all together and total debt is about 330% of GDP, according to the IIF data I cited in Debt Clock Ticking. We are in hock up to our ears.

But it’s actually worse than that, due to the kind of promises I mentioned above. Prime among them are Social Security and Medicare. Strictly speaking, these aren’t “unfunded” because they have dedicated revenue streams: payroll taxes. Most Medicare recipients also pay premiums. To date, these revenue sources have covered current expenditures and more, allowing the programs to build up reserves. But that’s about to change.

As of this year, both programs are in negative cash flow, meaning Congress must provide additional cash to pay the promised benefits. It will get worse, too. The so-called “trust funds” are going to run dry sooner or later, and it may be sooner. This month’s annual trustee report estimated Social Security will run out of reserves in 2034, and the hospitalization part of Medicare will go dry in 2026.

Just for the record, those “trust funds” don’t exist except as an accounting fiction. It is like you saving $100,000 for your child’s education and then borrowing all the money from your children’s education fund. You can pretend in your mind that you have set aside $100,000 for your child’s future education, but when it comes time to make those payments, you’ll have to pull it out of current income or liquidate other assets.

The US government has borrowed (or used or whatever euphemism you want to apply) all the money in those trust funds. So, talking about running out of reserves in 2034 or 2026 is rather meaningless. We’ve already run out of reserves. I was talking with Scott Burns about this and other facts over the unfunded liability (he wrote a book on it with Professor Larry Kotlikoff) and he gave me the great line, “The only truly bipartisan cooperation in Congress is that both sides lie.” Any time a politician talks about putting a “lock box” around Social Security or Medicare trust funds, he or she is either staggeringly ignorant or lying.

But, going with their terminology, these estimates of when the trust funds run out depend on a slew of assumptions. To estimate revenue, they must know how many workers the US has, their wages, and at what rates those wages will be taxed. To estimate expenses, they must know how many retirees will be drawing benefits, the amount of those benefits, and how long the retirees will live to receive them. They also have to assume an inflation rate on which the cost-of-living adjustment is based. A small deviation in any of those can have huge long-term consequences.

For what it’s worth, then, Social Security says it has a $13.2 trillion unfunded liability over the next 75 years. That’s the benefits they expect to pay minus the revenue they expect to receive.

Medicare projections require even more assumptions: what kind of treatments the program will cover, how much treatment senior citizens will need, and what those treatments will cost. All these could vary wildly but the “official” assumptions put Medicare’s 75-year unfunded liability at $37 trillion. It could be vastly more or, if we all get healthier and healthcare costs drop, could be less.

This being the government, I think the safe course is to assume their numbers are the best case, resembling reality only if everything goes exactly right. And of course, it won’t.

My friend Professor Larry Kotlikoff estimates the unfunded liabilities to be closer to $210 trillion. (Click on that sentence for a link to his Forbes column.) That’s a far cry from the $50 trillion official estimate.

So, at a minimum, we can probably assume Social Security and Medicare are at least another $50 trillion in debt on top of the $21.2 trillion (and growing) on-budget federal debt. And then you come to the scary part. This doesn’t include civil service or military retirement obligations, or federal backing for some private pensions via the Pension Benefit Guaranty Corporation, or open-ended guarantees like FDIC, Fannie Mae, and on and on.

Negative Cash Flow

Think back to my example of promising your daughter the beach wedding. That is sort of what is happening with Social Security, if you had accompanied the promise by asking your daughter to save a nickel a week toward paying for it. The resulting $28 after ten years would not begin to cover the cost, but your daughter will rightly argue she did her part. You will be on the hook for the rest, just as Congress will be on the hook with angry retirees who think they “paid” for their benefits.

That means benefits will continue once the trust funds run dry. Maybe they’ll make some minor cuts here and there, but voters won’t allow much, at least until enough Boomers leave the scene to let younger generations outnumber them. But as I continue to argue, Boomers are going to live a lot longer than the younger generations think. The deal each generation makes with previous generations is to die on schedule. The Boomer generation is going to break that deal. We will not go willingly into that good night.

But in reality, arguing over whether it’s $50 trillion or $200 trillion is pretty pointless. Long before we get to testing that hypothesis, we will have to cut spending or raise taxes or some combination of both.

This week, the Congressional Budget Office released its 2018 Long-Term Budget Outlook. Like the Social Security and Medicare trustees, the CBO makes assumptions, so it’s fair to be skeptical of its estimates. In fact, we had all better hope they are too pessimistic because we’re in deep trouble otherwise.

Because the CBO thinks federal spending will grow significantly faster than federal revenue, CBO foresees debt as a percentage of GDP will likely be 200% of GDP by 2048. But we will hit the wall long before then. Consider this table from the Committee for a Responsible Federal Budget.

CBO numbers show that by 2041, Social Security, health care, and interest expenditures will consume allfederal tax revenue. All of it. Everything else the government does (including defense) will require going into more debt.

Yes, making that projection requires an assumption about tax revenue, which requires another assumption about GDP. It could be wrong. But if so, I think it will be wrong in the non-helpful direction because CBO projections don’t include recessions. (You think we’ll get to 2048 without some years of negative GDP growth? I’ll take that bet.)

Note also that the amounts CBO projects for Social Security and healthcare spending may well be low. I think they are very low. They assume some payment cuts to doctors and hospitals that Congress routinely overrules each year, as well as a different inflation benchmark to govern cost-of-living adjustments. And I have little hope Congress and presidents, now or future, will ever gain control over “discretionary” spending.

Of course, the interest expense depends on interest rates. CBO assumes the 10-year Treasury will go from today’s below-2% yield to 3.7% in 2028 and 4.8% by 2048. That might be too high, too low, or just right. Your guess is as good as mine (or CBO’s).

The CBO also assumes a fairly robust employment picture throughout that time. However, we are entering a period in which automation will replace mass numbers of human jobs. It might also result in new industries and new jobs, but history shows the transition to create new jobs will take time. Bain & Company’s Karen Harris estimates automation could eliminate 40 million US jobs by 2030 and depress wages for the jobs that remain. That will reduce payroll tax revenue and drive safety-net spending higher, neither of which will help reduce the debt.

It’s not just Bain, either. McKinsey, Boston Consulting, and other think tanks all expect similar job losses, which CBO does not consider. Yet, it will mean more people not paying Social Security and taxes, hence large revenue losses and even bigger deficits, and more unemployed people looking for the social safety net to help them.

Note: The bulk of those job losses will come in the latter half of the 2020s as new technologies kick in. And new technologies always bring about new jobs, but unfortunately not in the places where the old jobs were lost nor in the industries for which people are trained. To paraphrase Jerry Lee Lewis, there is going to be a whole lot of retraining going on.

So, take whatever estimates are made about future deficits and debt, and realize they are going to be worse. There will be fewer people working and paying taxes and more people living longer and using benefits. Kiss your assumptions goodbye.

The Threats Go On

So, the on-budget picture looks terrible, and even more so when you add the unfunded liabilities on top of it. What else could go wrong? Plenty. I’ll mention just four more possibilities.

First, at least some of the state and local pension debt I described two weeks ago could easily wind up on the federal government’s plate. Enough states are in a pickle to probably get some kind of bailout through Congress. Maybe not this Congress, but when it’s a Democratic Congress? It may be a whole other ballgame. This would add trillions to federal spending.

Second, CBO and pretty much everyone else assumes the world will avoid major wars. Aside from the death, destruction, and resource diversion, wars are expensive. Our relatively minor (in the historical scheme of things) Iraq and Afghanistan involvements added trillions in debt. Will we get through the next two decades without more such actions, whether large or small? I fervently hope so, obviously, but I would not bet on it.

Third, the life extension technologies I think are coming soon will raise Social Security spending because people will live longer. They may also raise payroll tax revenue if people keep working longer, but it’s not clear which way the scale will tip. It will likely be a net drain on the budget, at least initially. And by the mid-2030s when true rejuvenation is widely available, kiss your actuarial assumptions goodbye.

Fourth, all this presumes that those with capital to lend will stay interested in lending it to the US government. They may not, as the government’s financial condition becomes increasingly precarious. Yes, we’ve heard this before and it proved groundless. Things change. The fact that people cried wolf doesn’t mean no wolves are out there.

The Venus Flytrap of Western Civilization: Entitlements

My friend Dr. Woody Brock, one of the best economists and social commentators that I know, wrote a marvelous essay this last week about part of the entitlement issues. I’m going to close with a few lines from his letter. You can see some of his other work at His more exclusive quarterly Profiles are a treasure trove of economic insight. (Occasionally he lets me share them in Over My Shoulder, by the way.) Now to the beginning of his latest Profile:

The death of the extended family throughout the G-7 nations during 1850-1950 will go down as one of the most momentous developments of past centuries. For it is this development that gave rise to the modern welfare state with its crippling retirement and medical promises made to all citizens. How did today’s entitlements crisis begin, why does it get ever larger, and what can be done about it?

President Trump’s tax reform bill has rightly been criticized for inflating the US fiscal deficit. To many, this was unconscionable at a point when US federal debt is already 100% of GDP. Yet like everyone else, these critics have been mum on the far greater growth of debt that will accrue from ever-exploding entitlements expenditures. This latter prospect was identified a decade ago by the bi-partisan Simpson-Bowles committee as by far the gravest threat to the future of the US.

CBO projections show that within 18 years, entitlements spending will absorb all US federal tax revenues—leaving no revenues even for interest expense on the debt and for the military. In Germany, which proudly pays annually for its expenditures without incurring debt, Deutsche Bank has estimated that by 2045, income tax rates of 80% (total, not marginal rates) would be needed for its PAYGO system. The entire workforce of the nation would be in bondage to the elderly. Other nations face even worse prospects.

Those spending projections and massive deficits are going to happen in the 2020s. Here is a graph that we used last year showing what is likely to happen during the next recession (which I now think we will likely avoid this year, but it is coming), if tax revenue falls to the same degree it did in the last one.

We will have at least a $2 trillion deficit in the next recession, plus a bear market that leaves pensions even more underfunded, and a slower recovery because high debt crowds out future growth. Numerous academic studies back up that statement.

I think a future Democratic Congress and president, or maybe a split Congress that is desperate for funding, will enact a Value-Added Tax (VAT) in response to this. At least that is what I hope. Woody is a little more pessimistic than I am and thinks, quoting at the end of his analysis, that politics and not demographics is the problem:

Furthermore, why need benefits be trimmed much less slashed when the staggering new wealth of the top 10% can be taxed to pay for all promised benefits? Today’s obsession with the growth of inequality will significantly impact how the US will resolve the entitlements issue. The nation will not cut benefits because doing so will prove politically impossible, as President Clinton has long stressed.

Rather, the nation will fund its promised Social Security and Medicare benefits via the only kind of tax that can raise the staggering sums needed to fund them: a net-worth tax on, say, the top 15% of the population. Raising income tax rates on the rich will not raise anywhere near the amount needed for the next 40 years. Only a net-worth tax can do so.

Here are the relevant mathematics. As already stated, the net worth of US households has now reached $100 trillion. The top 15% wealthiest families own 90% of this wealth, or about $90 trillion. When push comes to shove, resistance by the rich against a wealth tax will be swamped by the political reality that a good 60% of Americans will be obsessed with funding their old age. Thus, rich as they are, the very wealthy will have little political leverage with which to fend off an annual net-worth tax.

The political logic will be: “Look, you rich people have had a return on your wealth of over 6% during the past hundred years. Why should this change very much? But if this is so, then it is time for you to pay your fair share, that is, to part with 2.5% of your total net worth annually. Your wealth will still continue to grow. With increased annual tax revenue of some $2.5 trillion, it will be possible for Americans to receive their promised benefits.”

We would expect the same logic to translate into additional net-worth taxes at the state and municipal level.

The fallout from such a policy will of course be disastrous.

Oh, dear gods, I hope he is wrong. It would be beyond disastrous.

Next week, I will try to close this series by summing up all the debt we have to deal with globally, recognizing that we are all in it together. And we will begin looking at strategies we can take to protect ourselves. The good news is none of this is going to happen within the next few years, so we have time to make plans. I’m in the same situation as you and already implementing some changes.

Published:7/1/2018 12:49:33 PM
[Affirmative action] Affirmative action today… (Scott Johnson) The principle of equal treatment without regard to race is one that is close to my heart. Accordingly, one of my favorite books on a legal subject is Andrew Kull’s The Color-Blind Constitution. The book is full of surprises. For example, Kull devotes two chapters to the separate but equal doctrine approved by the Supreme Court in the 1896 case of Plessy v. Ferguson. The case represents the bygone era Published:6/30/2018 8:12:02 AM
[Startups] Ben Horowitz is coming to Disrupt SF It’s been more than four years since “The Hard Thing About Hard Things” was published and it remains — including to minds of many of us at TechCrunch — one of the best, most authentic, most instructive business books ever written. It’s partly for this reason that we’re so excited to announce its author, Ben […] Published:6/29/2018 11:38:59 AM
[US News] Bernie Sanders tells supporters that ‘we did win the election’ in many ways

Apparently, Bernie Sanders was at a book party in Washington, D.C. Wednesday, though we didn’t even know he had a book coming out. Well, there’s a stack of somebody’s books on a table and what looks to be a crowd of about a dozen people. Bernie Sanders at a book party in DC says “in […]

The post Bernie Sanders tells supporters that ‘we did win the election’ in many ways appeared first on

Published:6/27/2018 7:56:49 PM
[Markets] Paul Craig Roberts: "How Long Can The Federal Reserve Stave Off The Inevitable?"

Authored by Paul Craig Roberts,

When are America’s global corporations and Wall Street going to sit down with President Trump and explain to him that his trade war is not with China but with them? The biggest chunk of America’s trade deficit with China is the offshored production of America’s global corporations. When the corporations bring the products that they produce in China to the US consumer market, the products are classified as imports from China.

Six years ago when I was writing The Failure of Laissez Faire Capitalism, I concluded on the evidence that half of US imports from China consist of the offshored production of US corporations. Offshoring is a substantial benefit to US corporations because of much lower labor and compliance costs. Profits, executive bonuses, and shareholders’ capital gains receive a large boost from offshoring. The costs of these benefits for a few fall on the many - the former American employees who formerly had a middle class income and expectations for their children.

In my book, I cited evidence that during the first decade of the 21st century “the US lost 54,621 factories, and manufacturing employment fell by 5 million employees. Over the decade, the number of larger factories (those employing 1,000 or more employees) declined by 40 percent. US factories employing 500-1,000 workers declined by 44 percent; those employing between 250-500 workers declined by 37 percent, and those employing between 100-250 workers shrunk by 30 percent. These losses are net of new start-ups. Not all the losses are due to offshoring. Some are the result of business failures” (p. 100).

In other words, to put it in the most simple and clear terms, millions of Americans lost their middle class jobs not because China played unfairly, but because American corporations betrayed the American people and exported their jobs. “Making America great again” means dealing with these corporations, not with China. When Trump learns this, assuming anyone will tell him, will he back off China and take on the American global corporations?

The loss of middle class jobs has had a dire effect on the hopes and expectations of Americans, on the American economy, on the finances of cities and states and, thereby, on their ability to meet pension obligations and provide public services, and on the tax base for Social Security and Medicare, thus threatening these important elements of the American consensus. In short, the greedy corporate elite have benefitted themselves at enormous cost to the American people and to the economic and social stability of the United States.

The job loss from offshoring also has had a huge and dire impact on Federal Reserve policy.

With the decline in income growth, the US economy stalled. The Federal Reserve under Alan Greenspan substituted an expansion in consumer credit for the missing growth in consumer income in order to maintain aggregate consumer demand. Instead of wage increases, Greenspan relied on an increase in consumer debt to fuel the economy.

The credit expansion and consequent rise in real estate prices, together with the deregulation of the banking system, especially the repeal of the Glass-Steagall Act, produced the real estate bubble and the fraud and mortgage-backed derivatives that gave us the 2007-08 financial crash.

The Federal Reserve responded to the crash not by bailing out consumer debt but by bailing out the debt of its only constituency—the big banks. The Federal Reserve let little banks fail and be bought up by the big ones, thus further increasing financial concentration. The multi-trillion dollar increase in the Federal Reserve’s balance sheet was entirely for the benefit of a handful of large banks. Never before in history had an agency of the US government acted so decisively in behalf only of the ownership class.

The way the Federal Reserve saved the irresponsible large banks, which should have failed and have been broken up, was to raise the prices of troubled assets on the banks’ books by lowering interest rates. To be clear, interest rates and bond prices move in opposite directions. When interest rates are lowered by the Federal Reserve, which it achieves by purchasing debt instruments, the prices of bonds rise. As the various debt risks move together, lower interest rates raise the prices of all debt instruments, even troubled ones. Raising the prices of debt instruments produced solvent balance sheets for the big banks.

To achieve its aim, the Federal Reserve had to lower the interest rates to zero, which even the low reported inflation reduced to negative interest rates. These low rates had disastrous consequences. On the one hand low interest rates caused all sorts of speculations. On the other low interest rates deprived retirees of interest income on their retirement savings, forcing them to draw down capital, thus reducing accumulated wealth among the 90 percent. The under-reported inflation rate also denied retirees Social Security cost-of-living adjustments, forcing them to spend retirement capital.

The low interest rates also encouraged corporate boards to borrow money in order to buy back the corporation’s stock, thus raising its price and, thereby, the bonuses and stock options of executives and board members and the capital gains of shareholders. In other words, corporations indebted themselves for the short-term benefit of executives and owners. Companies that refused to participate in this scam were threatened by Wall Street with takeovers.

Consequently today the combination of offshoring and Federal Reserve policy has left us a situation in which every aspect of the economy is indebted - consumers, government at all levels, and businesses. A recent Federal Reserve study concluded that Americans are so indebted and so poor that 41 percent of the American population cannot raise $400 without borrowing from family and friends or selling personal possessions.

A country whose population is this indebted has no consumer market. Without a consumer market there is no economic growth, other than the false orchestrated figures produced by the US government by under counting the inflation rate and the unemployment rate.

Without economic growth, consumers, businesses, state, local, and federal governments cannot service their debts and meet their obligations.

The Federal Reserve has learned that it can keep afloat the Ponzi scheme that is the US economy by printing money with which to support financial asset prices. The alleged rises in interest rates by the Federal Reserve are not real interest rates rises. Even the under-reported inflation rate is higher than the interest rate increases, with the result that the real interest rate falls.

It is no secret that the Federal Reserve controls the price of bonds by openly buying and selling US Treasuries. Since 1987 the Federal Reserve can also support the price of US equities. If the stock market tries to sell off, before much damage can be done the Federal Reserve steps in and purchases S&P futures, thus driving up stock prices. In recent years, when corrections begin they are quickly interrupted and the fall is arrested.

As a member of the Plunge Protection Team known officially as the Working Group on Financial Markets, the Federal Reserve has an open mandate to prevent another 1987 “Black Monday.” In my opinion, the Federal Reserve would interpret this mandate as authority to directly intervene.

However, just as the Fed can use the big banks as agents for its control over the price of gold, it can use the Wall Street banks dark pools to manipulate the equity markets. In this way the manipulation can be disguised as banks making trades for clients. The Plunge Protection Team consists of the Federal Reserve, the Treasury, the SEC, and the Commodity Futures Trading Corporation. As Washington’s international power comes from the US dollar as world reserve currency, protecting the value of the dollar is essential to American power. Foreign inflows into US equities are part of the dollar’s strength. Thus, the Plunge Protection Team seeks to prevent a market crash that would cause flight from US dollar assets.

Normally so much money creation by the Federal Reserve, especially in conjunction with such a high debt level of the US government and also state and local governments, consumers, and businesses, would cause a falling US dollar exchange rate. Why hasn’t this happened? For three reasons.

One is that the central banks of the other three reserve currencies—the Japanese central bank, the European central bank, and the Bank of England—also print money. Their Quantitative Easing, which still continues, offsets the dollars created by the Federal Reserve and keeps the US dollar from depreciating.

A second reason is that when suspicion of the dollar’s worth sends up the gold price, the Federal Reserve or its bullion banks short gold futures with naked contracts. This drives down the gold price. There are numerous columns on my website by myself and Dave Kranzler proving this to be the case. There is no doubt about it.

The third reason is that money managers, individuals, pension funds, everyone and all the rest had rather make money than not. Therefore, they go along with the Ponzi scheme. The people who did not benefit from the Ponzi scheme of the past decade are those who understood it was a Ponzi scheme but did not realize the corruption that has beset the Federal Reserve and the central bank’s ability and willingness to continue to feed the Ponzi scheme.

As I have explained previously, the Ponzi scheme falls apart when it becomes impossible to continue to support the dollar as burdened as the dollar is by debt levels and abundance of dollars that could be dumped on the exchange markets.

This is why Washington is determined to retain its hegemony. It is Washington’s hegemony over Japan, Europe, and the UK that protects the American Ponzi scheme. The moment one of these central banks ceases to support the dollar, the others would follow, and the Ponzi scheme would unravel. If the prices of US debt and stocks were reduced to their real values, the United States would no longer have a place in the ranks of world powers.

The implication is that war, and not economic reform, is America’s most likely future.

In a subsequent column I hope to explain why neither US political party has the awareness and capability to deal with real problems.

Published:6/27/2018 4:26:09 PM
[Markets] Meanwhile, In The Arctic...

In a development that could further advantage OPEC members as they step up production to compensate for falling exports out of Venezuela and (potentially) Iran, the Barents Observer is reporting that two of Russia's largest Arctic out-shipment points for oil and LNG have become "packed with ice" leaving tankers and carriers stranded in the "paralyzed" area, which hasn't been this packed with ice at midsummer in four years. Experts had expected that ice clogging up the Gulf of Ob would melt with the summer months, allowing Rosatomflots, the state-owned energy company responsible for the region, to avoid relying on their nuclear-powered icebreakers to clear the area.


According to Rosatomflot, its icebreakers will be working at least through the first week of July to free stranded ships from the ice. Two icebreakers, the Taymyr and the Vaygach, are working overtime. There are also several smaller tugs and icebreakers working in the waters around the Sabetta port.

One Rosatomflot representative pointed out that the climate change fears which had analysts worried about rapid melting of ice caps in the Arctic have apparently receded.

The global warming, which there has been so much talk about for such a long time, seems to have receded a little and we are returning to the standards of the 1980s and 1990s, says company representative Andrey Smirnov.


Companies shipping from the area have in recent years invested in building more powerful tankers capable of breaking up the ice on their own. The projects are expected to ratchet up exports from the region by the equivalent of millions of barrels of oil per year.

The Yamal LNG plant is fully dependent on smooth shipping to and from the port of Sabetta. A fleet of 15 powerful top ice-class carriers are being built for the project. The ships are capable of independently breaking through more than two meter thick ice. Commercial shipments from Sabetta started in early December 2017.

Further south, company Gazprom Neft is operating the Novy Port project, which is built to be able to deliver up to eight million tons of oil per year.  A fleet of six tankers are being built for the Novy Port. The first vessels of the new fleet, the Shturman Albanov and the "Shturman Malygin" were put on the water in early 2016. The third fleet tanker, the “Shturman Ovtsyn” set course for the history books when it in mid-winter 2017 left the yard of the Samsung Heavy Industries in South Korea, made it through the Bering Strait and sailed all the way to Yamal. Later, also the Shturman Shcherbinin and the Shturman Koshelev webre built.

To help put the ice-pack in perspective, the blog Climateer Investor published a pair of heat-coded images showing the extent of the sea ice thickness in June 2018...


...Compared with June 2008 - a decade earlier.


So much for "global warming"...

Published:6/27/2018 3:24:49 AM
[Markets] The Beginning Of The End Of The Bilderberg/Soros Era

Authored by Alistair Crooke via The Strategic Culture Foundation,

The beginning of the end of the Bilderberg/Soros vision is in sight. The Old Order will cling on, even to the last of its fingernails. The Bilderberg vision is the notion of multi-cultural, international cosmopolitanism that surpasses old-time nationalism; heralding the end of frontiers; and leading toward a US-led, ‘technocratic’, global economic and political governance

Its roots lie with figures such as James Burnham, an anti-Stalin, former Trotskyite, who, writing as early as 1941, advocated for the levers of financial and economic power being placedin the hands of a management class: an élite – which alone would be capable of running the contemporary state - thanks to this élite’s market and financial technical nous. It was, bluntly, a call for an expert, technocratic oligarchy. 

Burnham renounced his allegiance to Trotsky and Marxism, in all its forms in 1940, but he would take the tactics and strategies for infiltration and subversion, (learned as a member of Leon Trotsky’s inner circle) with him, and would elevate the Trotskyist management of ‘identity politics’ to become the fragmentation ‘device’ primed to explode national culture onto a new stage, in the Western sphere. His 1941 book, The Managerial Revolution,” caught the attention of Frank Wisner, subsequently, a legendary CIA figure, who saw in the works of Burnham and his colleague a fellow Trotskyite, Sidney Hook, the prospect of mounting an effective alliance of former Trotskyites against Stalinism.

But, additionally, Wisner perceived its merits as the blueprint for a CIA-led, pseudo-liberal, US-led global order. (‘Pseudo’, because, as Burnham articulated clearly, in The Machiavellians, Defenders of Freedom, his version of freedom meant anything but intellectual freedom or those freedoms defined by America’s Constitution. “What it really meant was conformity and submission”).

In short, (as Paul Fitzgerald and Elizabeth Gould have noted), “by 1947, James Burnham’s transformation from Communist radical, to New World Order American conservative was complete. His Struggle for the World, [converted into a memo for the US Office of Strategic Services (OSS, the forerunner of CIA)], had done a ‘French Turn’ on Trotsky’s permanent Communist revolution, and turned it into a permanent battle plan for a global American empire. All that was needed to complete Burnham’s dialectic was a permanent enemy, and that would require a sophisticated psychological campaign to keep the hatred of Russia alive, "for generations".

What has this to do with us today?

A ‘Burnham Landscape’ of apparently, ‘centrist’ European political parties, apparently independent think-tanks, institutions, and NATO structures, was seeded by CIA – in the post war era of anti-Sovietism - across Europe, and the Middle East – as part of Burnham’s ‘battle plan’ for a US-led, global ‘order’. It is precisely this élite: i.e. Burnham’s oligarchic technocracy, that is facing political push-back today to the point at which the Liberal Order feels that it is struggling for its very survival against the enemy in the White House, as the editor of Spiegel Online has termed President Trump.

What has caused this?

Well, like him or hate him, President Trump has played a major part, if only by saying the unsayable. The rationality or not inherent in these Eckhart-style ‘unsayings’, or apophasis, is beside the point: Trump’s intuitive ‘discourse of saying the unsayable’ has taken most of the bolts out of the former Burnham-type, ideological structure. 

But in Europe, two main flaws to the Burnham blueprint have contributed, possibly fatally, to the blueprint crisis:

Firstly, the policy of populating Europe with immigrants, as a remedy for Europe’s adverse demographics (and to dilute to the point of erasure, its national cultures): "Far from leading to fusion”, writes British historian, Niall Ferguson, "Europe’s migration crisis is leading to fission. The play might be called The Meltdown Pot … Increasingly … the issue of migration will be seen by future historians as the fatal solvent of the EU. In their accounts Brexit will appear as merely an early symptom of the crisis". 

And secondly, the bi-furcation of the economy into two unrelated, and dis-equal economies, as a result of the élite’s mismanagement of the global economy, (i.e. the obvious the absence of ‘prosperity for all’).

Trump evidently has heard the two key messages from his constituency: that they neither accept to have (white) American culture, and its way-of-life, diluted through immigration; and, neither do they wish – stoically – to accommodate to America’s eclipse by China.

The issue of how to arrest China’s rise is primordial (for Team Trump), and in a certain sense, has led to an American ‘retrospective’: America now may only account for 14% of global output (PPP – Purchasing Power Parity basis), or 22%, on a nominal basis (as opposed to near half of global output, for which the US was responsible, at the close of WW2), but American corporations, thanks to the dollar global hegemony, enjoy a type of monopoly status (i.e. Microsoft, Google and Facebook, amongst others), either through regulatory privilege, or by marketplace dominance. Trump wants to halt this asset from decaying further and to leverage it again as a potent bargaining chip in the present tariff wars. This is clearly a political ‘winner’ in terms of US domestic grass-roots, politics, and the upcoming November mid-term elections.

The second strand seems to be something of a Middle East ‘retrospective’: to restore the Middle East to the era of The Shah, when ‘Persia’ policed the Middle East; when Israel was a regional ‘power’ implementing the American interest; and when the major sources of energy were under US control. And, further, when Russian influence was being attenuated, by leveraging radical Sunni Islam against Arab socialism, and nationalism.

Of course, Trump is savvy enough to know that it is not possible to revert wholly to that Kissinger-esque world. The region has changed too much for that. But Kissinger remains an influential adviser to the President (together with PM Netanyahu). And it is easy to forget that US dominance of the Middle East brought America not just control of energy, but the re-cycling of petrodollars into Wall Street, and the necklace of US military bases in the Gulf that both surround Iran, and give to the US its military muscle, reaching into Asia.

We have therefore Trump’s hugging of MBS, MBZ and Netanyahu, and a supporting narrative of Iran as a ‘malign actor’ in the region, and a facilitator of terrorism.

But, it is just a ‘narrative’, and it is nonsense, when put into a broader understanding of the regional context. The history of Islam has never been free from violent conflict (going back to earliest days: i.e. the Wars of the Ridda, or apostasy 632-3 etc.). But – lest we forget – this present era of Sunni radicalization (such as has given birth to ISIS) reaches back, at least, to the 17th and 18th Centuries, with the Ottoman disaster at the Gates of Vienna (1683); the consequent onset of the Caliphate dissolution; growing Ottoman permissiveness and sensuality, provoking Abd-el Wahhab’s radical zealotism (on which basis Saudi Arabia was founded); and finally the aggressive westernizing secularism in Turkey and Persia, which triggered what is called ‘political Islam’ (both Sunni and Shi’a that initially, were united, in a single movement).

The MBS narrative that Saudi Arabia’s ‘fundamentalism’ was a reaction to the Iranian Revolution is yet another ‘meme’ that may serve Trump and Netanyahu’s interests, but is just as false. The reality is that the modern Arab (Sunni) system, a holdover from the Ottoman era, has been in a long term channel of decline since WW1 - whereas Shi’i Islam is enjoying a strong revival across the northern tier of the Middle East, and beyond. Put rather bluntly: the Iranians are on the upside of history – it’s as simple as that.

And what Trump is trying to do is Iranian capitulation, in the face of the American-Israeli-Saudi siege, the key to undoing Obama (again), by trying to reassert US Middle East dominance, energy dominance and an Israeli resurgence of regional power. Subjugating Iran thus has emerged as the supreme litmus for re-establishing the unipolar global order.

It is so iconic precisely because, just as much as Trump would like to see Iran, Iraq and Iranian allies everywhere, fall to the unipolar hegemony, Iran is as central to the multipolar vision of Xi and Putin as it is iconic to Trump’s putative Middle East ‘makeover’. And it is not just symbolic: Iran is as pivotal to both Russian and Chinese geo-political strategies. In a word, Iran has more leverage to ensure survival than Trump may have anticipated.

America will leverage its dominance of the financial system to the limit to strangle Iran, and China and Russia will do what is necessary financially, and in terms of trade, to see that Iran does not implode economically – and remains a pillar of the multipolar alternative world order.

And it is here that the paradigm shifts in Europe come into play. It is not, I repeat not because Europe can be expected to show leadership or to ‘do’ much, but rather because the apophatic discourse of ‘saying the unsayable’ is spreading to Europe. It has not, so far, changed the paradigm of power, but may soon (i.e. with Merkel’s possible political demise). Germany may be more staid in its politics than Italy, but the voice of Italy’s new Interior Minister, Matteo Salvini, saying ‘no’ to the ‘Burnham’ proxies in Berlin is echoing across Europe, and beyond. It acts like a slap in the face.

Let us be absolutely clear: We are not suggesting that Europe will expend political capital in defending the JCPOA.

That is not likely.

We are saying that America’s dollar hegemony has proved toxic to the rest of the world in very many ways, and Trump - in leveraging that hegemony so gangsterishly: “We’re America, Bitch”, as one official described America’s approach – is fueling antagonism towards dollar hegemony (if not yet towards America per se). It is pushing all of non-America into a common stance of rebellion against America’s unipolar financial dominance.

This ‘revolt’ is already giving leverage to Kim Jong Un, as the Washington Post reports:

“With U.S.-China trade ties on the rocks, Kim is well-positioned to play both powers, talking sweet to Trump while pursuing a closer relationship with Xi…Kim understands the hierarchy. He knows that Xi is the Asian Godfather,” said Yanmei Xie, a China policy analyst at Gavekal Dragonomics, an economic research firm in Beijing. “He is making a pragmatic calculation that China can provide economic assistance to integrate North Korea diplomatically and economically into Northeast Asia …

“There is a regional effort, a sort of Northeast Asia coalition of make-believe, to maintain the fiction that the North Korea will de-nuke as long as Americans keep talking to it,” Xie said.

China is less focused on getting Kim to give away his weapons than on getting him to fall into line. It may eventually use trade and investment to keep him onside, experts said.

“With North Korea still struggling under U.N. sanctions, “China’s political and economic support is still highly important,” said Zhao Tong, a North Korea expert at the Carnegie-Tsinghua Center for Global Policy in Beijing. Zhao said the question now is: “How can China help North Korea develop its economy?”

“China can also help Kim normalize North Korea’s diplomatic status. That starts with treating him less like a rogue dictator and more like a visiting statesman.”

The same goes for Iran — in spades. China and Russia know how to play this game of ‘chicken’.

Published:6/26/2018 4:17:14 AM
[Politics] Is there a Difference between the Left’s Refusal to Serve and the Right’s?

The Left has become a public embarrassment, more so than in past years. Everything is racist. If you voted for Trump you’re a Nazi. Following the law that was on the books during Obama’s tenure as President means that children held in detention centers while their parents are being legally processed because they’ve entered the ...

The post Is there a Difference between the Left’s Refusal to Serve and the Right’s? appeared first on Godfather Politics.

Published:6/26/2018 12:46:07 AM
[Politics] Is there a Difference between the Left’s Refusal to Serve and the Right’s?

The Left has become a public embarrassment, more so than in past years. Everything is racist. If you voted for Trump you’re a Nazi. Following the law that was on the books during Obama’s tenure as President means that children held in detention centers while their parents are being legally processed because they’ve entered the ...

The post Is there a Difference between the Left’s Refusal to Serve and the Right’s? appeared first on Godfather Politics.

Published:6/26/2018 12:46:07 AM
[Markets] Solar Storms Present Danger Of Blackouts For Major East Coast Cities

Authored by Mac Slavo via,

The largest solar storm in recent history struck in 1859 and the auroras could be seen across the globe. But a solar storm of that magnitude today would cause devastating blackouts in major cities on the East Coast of the United States.

An upcoming report from the U.S. Geological Survey (USGS) warns that a region of the Eastern Seaboard will be particularly vulnerable to devastating blackouts in the event of a solar storm thanks to the rocks beneath the surface. It’s widely believed that the type of geomagnetic storm capable of wiping out the grid happens once every century, but a worst-case scenario might result in widespread blackouts that could last for months, the Space Weather Prediction Center told Bloomberg.

According to Bloomberg, the soon-to-be-released report found a 300-million-year-old rock beneath the surface of the Eastern Seaboard could amplify the next big solar storm from Washington D.C. all the way to Maine. The makeup of this rock wouldn’t allow the solar energy to go through it and would instead ricochet it back up to the surface, doubling the impacts in this region, the report also said.

But that isn’t the only problem facing those who live on the East Coast.

According to USGS research geophysicist and study lead author Jeffrey Love, the Eastern Seaboard is at risk for blackouts not only due to its abundance of insulating rocks but also due to the region’s proximity to the North Pole, where intense solar activity is most likely to strike.

“It’s an active problem that a lot of people are trying to solve and understand,” Space Weather Prediction Center scientist Christopher Balch told Bloomberg, according to The Weather Channel.

Love told Bloomberg that the new report is particularly important because the mid-Atlantic and Northeast hadn’t been previously studied in-depth with regards to how its geology would impact solar storms. Only the central U.S. was studied in this way, he added. Prior to this more recent study, the central United States was the main focus of solar storm risk assessments, and the threat to the Eastern Seaboard was not yet known.

A study in 2016 reported that the upper Midwest is the region that faces the highest threat from a geomagnetic storm. The researchers found that surges could be up to 100 times more powerful in northern Minnesota and Wisconsin compared to other areas of the United States, reported

The research from the USGS will be used to develop tests to measure how resilient the nation’s power grids are to solar storms, which is required by the Federal Energy Regulatory Commission.

The best way to prepare for a blackout is to have some extra water and food stored just in case.  You could also consider some heavy blankets in case the grid goes down in winter and keeping lanterns or candles on hand.

*  *  *

The Organic Prepper suggests that you find as many solutions as possible for the issues you would face if going for weeks (or longer) without power.  You must stay warm, eat, and drink.  Everything else is a bonus. You can live without the television, the video game console, the microwave in the kitchen, and the laptop. Other suggestions come in the form of books such as The Prepper’s Blueprint. The goal of the book is to help the reader “find freedom through self-reliance, and ultimately, to get you and your family to a point where you can not only survive but thrive, in a world that may be permanently altered.”

Published:6/25/2018 8:45:48 PM
[Markets] Dear High School Graduates...

Authored by Charles Hugh Smith via OfTwoMinds blog,

You deserve a realistic account of the economy you're joining.

Dear high school graduates: please glance at these charts before buying into the conventional life-course being promoted by the status quo.

Here's the summary: the status quo is pressuring you to accept its "solutions": borrow mega-bucks to attend college, then buy a decaying bungalow or hastily constructed stucco box for $800,000 in a "desirable" city, pay sky-high income and property taxes on your earnings, and when the stress of all these crushing financial burdens ruins your health, well, we've got meds to "help" you--lots of meds at insane price points paid for by insurance-- if you have "real" insurance without high deductibles, of course.

Here's the truth the status quo marketers don't dare acknowledge: every one of these conventional "solutions" only makes the problem worse. Student loan debt only makes your life harder, not easier, as the claimed "value" of a college degree is based on the distant past, not the present. The economy is changing fast and the conventional "solutions" no longer match the new realities. But don't expect anyone profiting from the predatory profiteering higher-education cartel to admit this.

The high cost of housing isn't "solved" by buying in at the top of an unprecedented bubble. Buying into bubbles only makes the problem worse, for all bubbles eventually pop.

The "solution" to crushing levels of debt is not to borrow more just to prop up a rotten, corrupt, dysfunctional and self-serving status quo. In effect, the young generations are being groomed to be the hosts for the parasitic classes that feed on young taxpayers, student loan debt-serfs, young buyers of bubble-priced housing, unaffordable sickcare "insurance" and all the rest of the status quo "solutions."

As writer Peter Turchin has explained, societies in decline overproduce elites.Those promised an elite slot who are left out become the engine of social unrest.

The status quo claims that getting a college diploma more or less guarantees you a slot in the elite class of folks with secure incomes and opportunities to get ahead and build real wealth.

The reality is only the top 5% of the work force are doing well. So of the 33% of the work force with university diplomas, the system only creates slots for the top 15% of that educational elite. The next 15% (the rest of the top 10% of the entire work force) can pick up the 2nd tier technocrat positions and everyone else gets the scraps: insecure jobs, mediocre pay, limited opportunities.

Before you accept that becoming a debt-serf to get a college diploma is a "solution," check out the other side of that trade: the mostly older, wealthier folks profiting from your debt-serfdom:

This parasitic predation is guaranteed by your federal government: you know, the institution everyone looks to for "solutions."

How did millions of students earn college diplomas before the hyper-financialization of the economy and before assistant deans made $350,000 a year in "competitive" salaries? It's a mystery lacking any mainstream explanation.

Speaking of debt--here's the nation's total debt level: note that the amount of debt required to push GDP higher keeps increasing far faster than GDP:

As for plunking down hundreds of thousands of dollars for that little cheaply constructed stucco/particle board/plastic box: housing prices in hot markets such as Dallas and Seattle have far exceeded the previous hyper-financialized housing bubble top in the mid-2000s:

Don't worry about soul-crushing commutes, homeless encampments or rapidly rising taxes: asset bubbles make everything bearable, until they pop.

You deserve a realistic account of the economy you're joining. Here's reality: the vast majority of the gains reaped since your birth have flowed to the very top of the hyper-financialized wealth-power pyramid.

As Bucky Fuller noted in his famous dictum, “You never change things by fighting the existing reality. To change something, build a new model that makes the existing model obsolete."

Rather than fight a system designed to strip-mine you for life, seek a model for your life that obsoletes all the perverse conventional "solutions."

*  *  *

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Published:6/25/2018 9:43:13 AM
[Markets] Atrocity Porn And Hitler Memes Target Trump For Regime Change

Authored by James George Jatras via The Strategic Culture Foundation,

American and global audiences have been bombarded with media images of wailing children in holding facilities, having been separated from adults (maybe their parents, maybe not) detained for illegal entry into the United States. The images have been accompanied by “gut-wrenching” audio of distraught toddlers screaming the Spanish equivalents of “Mommy!” and “Daddy!” – since, as any parent knows, small children never cry or call for their parents except in the most horrifying, life-threatening circumstances.

American and world media have provided helpful color commentary, condemning the caging of children as openly racist atrocities and state terrorism comparable to Nazi concentration camps and worse than FDR’s internment of Japanese and Japanese-Americans. Indeed, just having voted for Trump is now reason enough for Americans to be labeled as Nazis.

Finally, the presumptive Hitler himself, also known as President Donald Trump, citing the pleas of First Lady Melania and First Daughter Ivanka, signed an Executive Order to provide for adults and (their?) children to be detained together. However, the order is unlikely to hold up in court, with sanctuary-minded states aiming to obstruct border enforcement the way Trump’s earlier order on vetting arrivals from terrorism-prone countries has been crippled by the federal judiciary. His media and bipartisan political opposition will be happy only when all border violation detentions cease and America has gone full Merkel, starting with ending Trump’s declared zero tolerance for illegal crossings and restoration of Barack Obama’s catch-and-release policy.

Even then, Trump will be vilified for taking so long to do it. Whether or how Trump may yield further is not clear, but rather than slaking the hate campaign against him, his attempted effort at appeasement has put the smell of political blood in the water with the November 2018 Congressional midterm elections looming.

Some images of small children have become veritable icons of Trumpian brutality. One photo, reportedly of a two-year-old Honduran girl (who in fact had not been separated from her mother), graced the cover of Time magazine, confronting the black-hearted tyrant himself. Another, of a little boy in a cage, went viral before it was revealed that this kid had nothing to do with the border but rather was briefly inside a staged pen as part of a protest in Dallas.

The reality behind the pictures doesn’t matter, though. More important are the images themselves and their power, along with dishonest media spin, to produce an emotional response that short-circuits critical thinking.

Never mind what the facts are! Children are suffering! Trump is guilty! We need to “do something”!

On point of comparison, let’s remember the  saturation media distribution given in 2016 to a picture of a little boyOmran Daqneesh, said to have been pulled from the rubble of Aleppo after what was dubiously reported as a Russian airstrike. Promptly dubbed “Aleppo Boy,” his pathetic dusty image immediately went viral in every prestige outlet in the United States and Europe. The underlying message: we – the “international community,” “the Free World,” the United States, you and I – must “do something” to stop Syrian President Bashar al-Assad and his main backer and fellow Hitler clone Vladimir Putin.

(Not long before, another little boy, also in the area of Aleppo, was beheaded on video by the “moderate” US-supported jihad terror group Harakat Nour al-Din al-Zenki. The images of his grisly demise received far less media attention than those of official Aleppo Boy. This other youngster received no catchy moniker. No one called for anyone in power to “do something.” In fact, western support for the al-Zenki murderers – which the Obama administration refused to disavow even after the beheading and allegations of chlorine gas use by al-Zenki – can itself be seen as part of “doing something” about the evil, evil Assad. (Reportedly Trump’s viewing the beheading video led to a cutoff of CIA aid to some jihad groups.) Another small detail readily available in alternative media but almost invisible in the major outlets: Mahmoud Raslan, the photographer who took the picture of Aleppo Boy and disseminated it to world acclaim, also took a smiling selfie with the beaming al-Zenki beheaders of the other kid. But, hey, says Raslan, I barely know those guys. Now let’s move on . . . )

For those who have been paying attention for the past couple of decades, the Trump border crisis kids, like Aleppo Boy before them, are human props in what is known as 'atrocity porn' designed to titillate the viewers through horror and incite them to hatred of the presumed perpetrators. Atrocity propaganda has long been a part of warfare – think World War I claims of Belgian babies impaled on German bayonets – but with modern digital technology and social media the impact is immediate and universal.

It’s irrelevant whether what is identified in images corresponds to reality. What matters is their ability to evoke mindless, maudlin emotionalism, like MSNBC’s Rachel Maddow choking up in tears over the border children or the similar weepy display in 2016 by CNN’s Kate Bolduan over Aleppo Boy.  

Now being deployed in an American domestic context over whether or not the US should be allowed to control its borders, for decades atrocity porn has been essential for selling military action in wars of choice unconnected to the actual defense of the US: incubator babies (Kuwait/Iraq); the Racak massacre (Kosovo); the Markale marketplace bombings, Omarska “living skeletons,” and the Srebrenica massacre (Bosnia); rape as calculated instrument of war (Bosnia, Libya); and false flag poison gas attacks in Ghouta  and Douma (Syria). Never mind that the facts, to the extent they eventually become known, may later turn out to be very different from the categorical black-and-white accusations on the lips of western officials and given banner exposure within hours if not minutes of the event in question.

Atrocity porn dovetails closely with another key meme, that of Hitler-of-the-month. In painting Trump as der Führer on the border, we see coming home to America a ploy that has been an essential element to justify foreign regime change operation, each of which has been spelled out in terms of black-and-white, good-versus-evil Manichaean imperatives, with the side targeted for destruction or replacement having absolutely no redeeming qualities. This entails first of all absolute demonization of the evil leader in what is called reductio ad Hitlerum, a concept attributed to philosopher Leo Strauss in 1951. Russia’s Vladimir Putin has been characterized by name as another Hitler by Hillary Clinton and others. Among the prominent “Hitlers” since 1991 have been Saddam Hussein (Iraq), Slobodan Milosevic (Yugoslavia/Serbia), Radovan Karadzic (Republika Srpska), Moammar Qaddafi (Libya), and Bashar al-Assad (Syria), with less imposing Führer figures to be found in Mohamed Farrah Aidid (Somalia), Manuel Noriega (Panama), Mahmoud Ahmadinejad (Iran), and Omar al-Bashir (Sudan).

With apologies to Voltaire, if Hitler had not existed it would be necessary for the US-UK Deep State to invent him . . .

Today the atrocity porn and Hitler memes that have been so useful in justifying regime change in other countries are being directed with increasing intensity against America’s own duly elected president. This is at a time when the original conspiracy to discredit and unseat him, the phony “Russian collusion” story, is in the process of unraveling and being turned back on its originators. Horror of horrors, Trump is now feeling free enough to move forward on a meeting with Putin.

Keep in mind that Putin is, according to Hillary Clinton, leader of the worldwide “authoritarian, white-supremacist, and xenophobic movement” who is “emboldening right-wing nationalists, separatists, racists, and even neo-Nazis.” So he and Hitler-Trump should get on famously! The prospect of any warming of ties between Washington and Moscow has elements of the US intelligence agencies, together with their British coconspirators in MI6 and GCHQin an absolute panic.

That’s why desperate measures are in order. As noted earlier, when confronted with a reincarnation of the most evil personage in history, even the most extreme actions cannot be ruled out. Demonizing the intended target neutralizes objections to his removal – by any means necessary.

After all, how can any decent person oppose getting rid of Hitler?

Published:6/23/2018 10:34:41 PM
[Markets] Debunking The Persistent Myth Of U.S. Precision Bombing

Authored by Nicholas Davies via,

U.S. media routinely repeat Pentagon talking points about the accuracy of U.S. bombing, but how precise are these attacks?

Opinion polls in the United States and the United Kingdom have found that a majority of the public in both countries has a remarkably consistent belief that only about 10,000 Iraqis were killed as a result of the U.S.-British invasion of Iraq in 2003.

Estimates of deaths in Iraq actually range from 150,000 to 1.2 million. Part of the reason for the seriously misguided public perception may come from a serious belief in guided weapons, according to what the government tells people about “precision” bombing.  But one must ask how so many people can be killed if these weapons are so “precise,” for instance in one of “the most precise air campaigns in military history,” as a Pentagon spokesman characterized the total destruction last year of Raqqa in Syria.

The dreadful paradox of “precision weapons” is that the more the media and the public are wrongly persuaded of the near-magical qualities of these weapons, the easier it is for U.S. military and civilian leaders to justify using them to destroy entire villages, towns and cities in country after country: Fallujah, Ramadi and Mosul in Iraq; Sangin and Musa Qala in Afghanistan; Sirte in Libya; Kobane and Raqqa in Syria.

An Imprecise History

The skillful use of disinformation about “precision” bombing has been essential to the development of aerial bombardment as a strategic weapon. In a World War II propaganda pamphlet titled the “Ultimate Weapon of Victory”, the U.S. government hailed the B-17 bomber as “… the mightiest bomber ever built… equipped with the incredibly accurate Norden bomb sight, which hits a 25-foot circle from 20,000 feet.“

However, according to the website WW2Weapons, “With less than 50 per-cent cloud coverage an average B-17 Fortress Group could be expected to place 32.4% of its bombs within 1000 feet of the aiming point when aiming visually.”  That could rise to 60 percent if flying at the dangerously low altitude of 11,000 feet in daylight.

The inaccurate B17 “Flying Fortress”

The U.K.’s 1941 Butt Report found that only five percent of British bombers were dropping their bombs within five miles of their targets, and that 49 percent of their bombs were falling in “open country.”

In the “Dehousing Paper,” the U.K. government’s chief scientific adviser argued that mass aerial bombardment of German cities to “dehouse” and break the morale of the civilian population would be more effective than “precision” bombing aimed at military targets.  British leaders agreed, and adopted this new approach: “area” or “carpet” bombing, with the explicit strategic purpose of “dehousing” Germany’s civilian population.

The U.S. soon adopted the same strategy against both Germany and Japan, and a U.S. airman quoted in the post-war U.S. Strategic Bombing Survey lampooned efforts at “precision” bombing as a “major assault on German agriculture.”

The destruction of North Korea by U.S.-led bombing and shelling in the Korean War was so total that U.S. military leaders estimated that they’d killed 20 percent of its population.

In the American bombing of Vietnam, Laos and Cambodia, the U.S. dropped more bombs than all sides combined in the Second World War, with full scale use of horrific napalm and cluster bombs.  The whole world recoiled from this mass slaughter, and even the U.S. was chastened into scaling back its military ambitions for at least a decade.

The American War in Vietnam saw the introduction of the “laser-guided smart bomb,” but the Vietnamese soon learned that the smoke from a small fire or a burning tire was enough to confuse its guidance system.  “They’d go up, down, sideways, all over the place,” a GI told Douglas Valentine, the author of The Phoenix Program. “And people would smile and say, ‘There goes another smart bomb!’  So smart a gook with a match and an old tire can fuck it up.”

Kicking the Vietnam Syndrome

President Bush Senior hailed the First Gulf War as the moment that America “kicked the Vietnam syndrome once and for all.”  Deceptive information about “precision” bombing played a critical role in revitalizing U.S. militarism after defeat in Vietnam.

The U.S. and its allies ruthlessly carpet-bombed Iraq, reducing it from what a UN report later called “a rather highly urbanized and mechanized society” to “a pre-industrial age nation.”  But the Western media enthusiastically swallowed Pentagon briefings and broadcast round-the-clock bomb-sight footage of a handful of successful “precision” strikes as if they were representative of the entire campaign.  Later reports revealed that only seven percent of the 88,500 tons of bombs and missiles devastating Iraq were “precision” weapons.

The U.S. turned the bombing of Iraq into a marketing exercise for the U.S. war industry, dispatching pilots and planes straight from Kuwait to the Paris Air Show.  The next three years saw record U.S. weapons exports, offsetting small reductions in U.S. arms procurement after the end of the Cold War.

The myth of “precision” bombing that helped Bush and the Pentagon “kick the Vietnam syndrome” was so successful that it has become a template for the Pentagon’s management of news in subsequent U.S. bombing campaigns. It also gave us the disturbing euphemism “collateral damage” to indicate civilians killed by errant bombs.

The devastating aerial assault on Baghdad in 2003, known as “shock and awe.”

‘Shock and Awe’

As the U.S. and U.K. launched their “Shock and Awe” attack on Iraq in 2003, Rob Hewson, the editor of Jane’s Air-Launched Weaponsestimated about 20-25 percent of the U.S. and U.K.’s “precision” weapons were missing their targets in Iraq, noting that this was a significant improvement over the 1999 bombing of Yugoslavia, when 30-40 percent were off-target. “There’s a significant gap between 100 percent and reality,” Hewson said. “And the more you drop, the greater your chances of a catastrophic failure.”

Since World War II, the U.S. Air Force has loosened its definition of “accuracy” from 25 feet to 10 meters (39 feet), but that is still less than the blast radius of even its smallest 500 lb. bombs.  So the impression that these weapons can be used to surgically “zap” a single house or small building in an urban area without inflicting casualties and deaths throughout the surrounding area is certainly contrived.

“Precision” weapons comprised about two thirds of the 29,200 weapons aimed at the armed forces, people and infrastructure of Iraq in 2003.  But the combination of 10,000 “dumb” bombs and 4,000 to 5,000 “smart” bombs and missiles missing their targets meant that about half of “Shock and Awe’s” weapons were as indiscriminate as the carpet bombing of previous wars.  Saudi Arabia and Turkey asked the U.S. to stop firing cruise missiles through their territory after some went so far off-target that they struck their territory. Three also hit Iran.

“In a war that’s being fought for the benefit of the Iraqi people, you can’t afford to kill any of them,” a puzzled Hewson said. “But you can’t drop bombs and not kill people.  There’s a real dichotomy in all of this.”

‘Precision’ Bombing Today

Since Barack Obama started the bombing of Iraq and Syria in 2014 more than 107,000 bombs and missiles have been launched. U.S. officials claim only a few hundred civilians have been killed. The British government persists in the utterly fantastic claim that none of its 3,700 bombs have killed any civilians at all.

Former Iraqi Foreign Minister Hoshyar Zebari, a Kurd from Mosul, told Patrick Cockburn of Britain’s  Independent newspaper that he’d seen Kurdish military intelligence reports that U.S. airstrikes and U.S., French and Iraqi artillery had killed at least 40,000 civilians in his hometown, with many more bodies still buried in the rubble.  Almost a year later, this remains the only remotely realistic official estimate of the civilian death toll in Mosul. But no other mainstream Western media have followed up on it.

The consequences of U.S. air wars are hidden in plain sight, in endless photos and videos. The Pentagon and the corporate media may suppress the evidence, but the mass death and destruction of American aerial bombardment are only too real to the millions of people who have survived it.

Published:6/23/2018 8:35:11 PM
[Markets] Ron Paul On 'The Dollar Dilemma': Where To From Here?

Authored by Ron Paul via The Mises Institute,

Introduction: Where We Are

It’s a fallacy to believe the US has a free market economy. The economy is run by a conglomerate of individuals and special interests, in and out of government, including the Deep State, which controls central economic planning.

Rigging the economy is required to prevent market forces from demanding a halt to the mistakes that planners continuously make. This deceptive policy can last only for a limited time. Ultimately, the market proves more powerful than government manipulation of economic events. The longer the process lasts, the greater the bubble that always bursts. The planners in charge have many tools to perpetuate confidence in an unstable system, but common sense should tell us that grave dangers lie ahead.

Their policies strive to convince the unknowing that the dollar is strong and its status as the world’s reserve currency is secure, no matter how many new dollars they create of out of thin air. It is claimed that our foreign debt is always someone else’s fault and never related to our own monetary and economic mismanagement.

Official government reports inevitably claim inflation is low and we must work harder to increase it, claiming price increases somehow mystically indicate economic growth.

The Consumer Price Index is the statistic manipulated to try to prove this point just as they use misleading GDP numbers to do the same. Many people now recognizing these reports are nothing more than propaganda. Anybody who pays the bills to maintain a household knows the truth about inflation.

Ever since the Great Depression, controlling the dollar price of gold and deciding who gets to hold gold was official policy. This advanced the Federal Reserve’s original goal of demonetizing precious metals, which was fully achieved in August 1971. Today, even though the official position of all central banks is that gold is not money, central bankers constantly rig the dollar price of gold, pretending the dollar is stronger than it really is. Just as the market overrode the artificial price of $35 per ounce in the 1970’s, today’s price will soar when the dollar is dethroned as the king of the world’s currencies.

In the rigged financial system, stock and bond prices are kept artificially high for the wealthy on Wall Street. To do this, interest rates have to be kept below market rates—which is a major contributing factor to gross economic distortions and financial bubbles.

The false belief setting the stage for an economic crash is the doctrine of “deficits don’t matter,” endorsed universally in the nation’s capital, has been going on for decades. We are destined to soon find out that deficits do matter, and matter very much. Denying economic truth and common sense for long periods of time always ends badly.

If one were to listen only to the MSM recite government economic reports, concerns for the future would be minimal. Low unemployment rates, negligible inflation, no hot war going on, and the US remains the wealthiest and militarily the most powerful nation in history.  Are the worriers justified in their concerns?

There are a lot of them yet the Fed doesn’t seem to be concerned, but then again it has never warned of trouble ahead, even when a major correction was at our doorstep. This is either because the Fed chairmen don’t know any better, or they don’t want to panic the people into preparing for a crisis by knowing the truth. My guess is that it’s both.

One thing for sure is that middle class America is not of much concern to the money managers. What occupies their minds is how to protect Wall Street from any financial crisis that might arise. The monetary elite are alert as to who will be blamed, and the Fed in particular, must be protected.

Since 1987, it’s been the responsibility of the Plunge Protection Team (the president’s Working Group on Financial Markets) to protect Wall Street from sudden and severe corrections in the stock and bond markets.

There are four powerful agencies that secretly can do just about anything they care to do to protect the monetary elites. They are: the Federal Reserve Bank, the US Treasury Department, the Securities and Exchange Commission, and the Commodity Futures Trading Commission. It’s my opinion that the Treasury’s Exchange Stabilization Fund, which was funded by gold confiscated in 1934 by FDR at $20 per ounce and immediately repriced at $35, is still “legally” permitted to be engaged in the gold market and foreign exchange rates.

The key individuals, involved in any rescue operation during a financial crisis, are the Fed Chairman, the Treasury Secretary, the Chairman of the SEC, and the CFTC. We can be assured that they were quite active in the financial crisis of 2007 and in the years of quantitative easing failures that followed. Today’s amazing stock market “success” (as of January 2018) is especially interesting since there is a net outflow of funds from the market. This means that the PPT has been successful in delaying the major correction that is required.

Abnormally low interest rates permit buybacks, mergers, and direct intervention in purchasing stocks and bonds by the PPT or by its allies around the world, with funds clandestinely provided by the Fed, to prop up the market and manipulate the gold price. There’s good reason the financial elite hysterically oppose an audit of the Fed.

If more people knew how fragile the economy is and what is required to hold things together, there would be a lot less optimism. But the bigger question is: Do people accept the government’s favorable reports on the state of the nation’s economy?

Even the mediocre GDP reports overstate economic growth. Since 2008, government debt has grown much faster than GDP, which some claim supports the notion that the more debt the Congress runs up, the better off the economy will be, rather than admitting there’s been no overall growth.

The increase in prosperity has been limited to the already wealthy. It is true that the rich are getting richer and the middle class is being wiped out. Belief in this fiction is limited, and the seriousness of the problem, that more than half the population now realizes, explains the anger and frustration the people feel. Debt may make one feel wealthier on the short term but it is not wealth.

There are many reasons why Americans should be deeply concerned. Evidence readily exists that our prosperity and our liberties are threatened. Our bipartisan foreign policy of interventionism is needlessly driving us toward a major military conflict. In the last several decades, the US has  engaged in constant military conflict remaking the Middle East and elsewhere. Whether it’s a Republican or Democrat administration, the policy remains the same— an obsession to constantly aggravate Russia, China, Iran, North Korea, Syria, Iraq, and Afghanistan. One of these days we can expect the victims of our interventions in their internal affairs, to declare “enough is enough” and gang up against us. The American people will likewise get tired of financing our senseless warmongering policies and demand that they stop.

Our economy is burdened with multiple problems: unsustainable government deficits at all levels; unfunded liabilities; student loan debt; stagnant wages; lingering consequences of the Fed’s QE policy; gross mal-distribution of wealth which generates huge social conflicts; a broken educational system; a breakdown of the family unit affecting all races and classes; and excessive dependence on government benefits and special interest privileges— all of which contribute to anger, frustration, and concern for the future.

Corruption in government is epidemic. Few people believe the lies our officials tell us and most Americans know that the truth-tellers, i.e. the whistle-blowers, are punished, while the criminals in government are rewarded. Commissions, special investigations, and prosecutors are set up to investigate government malfeasance, but instead are used to cover up mistakes and political crimes and never to seek the truth.

Economic conditions, our disastrous foreign policy, and the worsening moral chaos all justify the disillusionment of the American People. Polls show more than 70% of Americans believe the sinister Deep State is in charge of running our government, not our elected leaders.

Because of the dangerous financial situation in which we find ourselves, many people now recognize that it’s caused by the massive debt that results from excessive government spending on war and welfare. It’s becoming common knowledge that this constant spending beyond our means could not occur without the Federal Reserve accommodating congressional spendthrifts with endless monetary inflation. This is why the call for monetary reform is getting louder. These dangers prompt a growing number of people to plan for an alternative monetary system. This is good news.

The reason deep concern about monetary policy is so important, is that it acknowledges how our current political system is failing. It confirms that the policy of central economic planning, inflationism by central bankers, the swollen welfare/warfare state, the casual acceptance of deficit financing, and corporatism has failed. Though it is self-evident, the politicians remain in denial. The constant and outrageous petty partisan fights that dominate the news, distracts from the failure of the current policies, which both parties endorse. They’re “all Keynesians now.”

The struggle is simply over power and whose special interests are being served. The issue of authoritarianism versus voluntarism is never considered. The constant political noise we’re exposed to avoids dealing with the significance of monetary policy. The main purpose of the Federal Reserve is to finance an immoral and unworkable system. Much can be achieved with a better understanding of how the monetary system works. A growing interest in market-driven competing currencies and sound money offers an opportunity to challenge the relationship of fiat money and government tyranny.

The Case for Gold 

For years, as a Member of Congress, I supported the principle of competing currencies in the market place, offering legislation that would eliminate the Fed’s monopoly control of monetary policy. This included removing sales and capital gains taxes on silver and gold, if the market chose to use them as money. The fraud of counterfeiting US currency, as is routinely committed by the central bank, would be prohibited. This is consistent with Hayek’s proposal for the denationalization money, “an idea whose time has come.” 

The beneficiaries of the current fiat system will vigorously resist such a plan. Control over money has been cherished, for thousands of years by all forms of governments, in collusion with bankers. This partnership has been destructive to the middle class while enriching the well off. The unfairness of a fiat monetary system frequently has led to dangerous social and political upheavals. Our current system is drifting in that direction and has prompted the current interest in monetary reform.

There are several major efforts being made to replace the fiat dollar with gold or cryptocurrencies, while other countries are making plans to challenge the dollar as the world’s reserve currency.                         

The collapse of the Bretton Woods Agreement in 1971 created monetary chaos the following decade, with gold going from $35 per ounce to an astounding $800. Very high price inflation of 15% and interest rates as high as 21% resulted, along with a very weak dollar. In 1980 Congress enacted legislation directing a commission be set up to study the role of gold in the monetary system.  President Carter signed the bill into law and the “Gold Commission” met in 1981. I was a member of that 17 member commission, which was stacked against gold supporters 15 to 2. The establishment easily won the “debate” to continue and massively expand the fiat dollar standard, guaranteeing that the problems we now face would be much worse.

My dissenting views, co-signed by Lewis Lehrman, were published in the book “The Case for Gold.” The only positive outcome was the Commission’s recommendation that the US Treasury mint gold and silver eagles. This was another significant step away from FDR’s 1933 executive order that made it illegal for American citizens to own gold. Legislation passed in 1975 nullified that E.O.

The world now, under very different circumstances, is once again considering official use of gold in the monetary system. A growing consensus agrees that a world-wide monetary crisis is fast approaching and once again the importance of gold as money is being discussed. Those who benefit from the fiat dollar standard are not pleased with this renewed interest in gold, nor with the possibilities that blockchain technology may provide a nongovernment alternative to the current system of money and banking. The principle of gold as money has been acknowledged for thousands of years and is not going to be ignored any time soon.

The current financial chaos brought back the debate over the exact role gold should play in the international monetary system. There are many signs that various governments are considering using gold as an alternative to the fiat dollar. China for the past three years has been a net seller of dollar denominated assets and a major importer of gold. It is making an effort to popularize a gold Yuan to be used in place of the dollar in international oil transactions. China may well have more clout in this endeavor than is generally realized. Other countries like Russia, India and Brazil are cheering the Chinese on and are net purchasers of gold. The US, picking a fight in a senseless trade war with China, only adds to that country’s resolve to stand up to our domineering attitude.

Provoking China with threats over sea lanes isn’t necessary and provides no benefit. China has near monopoly control over rare earth minerals, which, if needed by other countries, can be used as leverage against us in a trade or currency war with them. China has an advantage of being a creditor nation, while we are the world’s largest debtor nation. As conditions deteriorate this will become a big problem for us and aid China and others in their efforts to implement an alternative currency to the dollar.

We’re in a precarious position with China, and the importance of gold is going to be more beneficial to them than to us when the monetary crisis hits. We will no longer be in the driver’s seat in world financial matter as we have been in the past 100 years.

Just figuring out exactly where physical gold sits and who actually owns it is a challenge. It is believed that essentially all the gold discovered in human history still exists somewhere. It’s durability and universal attractiveness are what throughout the ages, has qualified it as the most unique and desired commodity to be used as money. Approximately 190,000 tons have been mined to date: all of this gold would fit into a cube 23 yards on each side.

Already the approaching currency crisis has prompted some countries to repatriate their gold from the safe havens chosen during the various crises that occurred in the 20th Century. US vaults were especially popular during the various wars in Europe. The effort today by some countries to get their gold back reflects a growing loss of confidence in the dollar and America’s stature around the world to be the “keeper of last resort.” Our weak financial condition is not being ignored. Government spending and huge deficits are unsustainable and we’re starting to pay a price for it.

There is now a growing awareness of a problem in locating gold, identifying exactly who the owners are, and determining how much of it has been loaned out without its rightful owner’s knowledge. This is now acknowledged as a common practice. The effort to return some gold has not gone smoothly. Delays and excuses are common. Germany, Italy, Hungary, Austria and the Netherlands are asking that their gold be returned from the countries where it has been stored.

The current Treasury Secretary, Steven Mnuchin, was curious enough about gold to visit Fort Knox, in Kansas, something only two other Treasury Secretaries had bothered to do. He joked that: “I assume the gold is still there,” but added that “the gold was safe.” This is something nobody can be sure of since the last audit was in 1953.

During the Gold Commission hearings in 1981, I proposed that we request an audit of US gold holdings. The request was defeated 15 to 2. I suspect that access to this gold is available only to the “Deep State” and not to the American People from whom it was taken at $20 per ounce.

Central bankers are coy about gold’s importance as a monetary metal. Former Fed Chair Benjamin Bernanke, at one of our hearings, claimed flatly that gold was not money.  When I pressed Bernanke on why, then, do central banks hold gold, he declared that after a long pause that it was merely “tradition.” He had no interest in my suggestion that the gold could be sold off to the American people if it’s not money. The point is that due to today’s impending crisis, many governments are now accumulating more gold—while others are holding onto what they have with the expectation it will once again be used in the monetary system.

Even former Chair Alan Greenspan has had an on-again off-again favorable relationship with gold. Basically, when working within the establishment he was anti-gold, but as a private citizen he has been much more sympathetic. This is what he had to say about gold in 1966, in his frequently quoted article, Gold and Economic Freedom: “…gold and economic freedom are inseparable …government deficit spending under a gold standard is severely limited.” And more: “The abandonment of the gold standard made it possible for the welfare statists to use the banking system as a means to an unlimited expansion of credit” (by the Federal Reserve). He closed his article with a couple truisms: “In the absence of the gold standard, there is no way to protect savings from confiscation through inflation. There is no store of value…Deficit spending is simply a scheme for the confiscation of wealth. Gold stands in the way of this insidious process.”

In private, I asked Greenspan about this article and surprisingly he said that he had just recently reread it and still totally agreed with it. When I met with him I had an original copy of the article (from The Objectivist Newsletter) with me, which he agreed to autograph. While signing it, I asked if he’d like to add a disclaimer. He said there would be no need for that. Since leaving the Fed, he has said a few things that were slightly favorable to gold. We must remember though, it’s what people do, not what they say, that reflects the “Truth Standard.” That’s what counts.

Paul Volcker became Chairman of the Fed on August 7, 1979. His responsibility was to end the economic debacle of the 1970s that resulted from the breakdown of the Bretton Woods monetary system, established in 1945 after WWII. Ironically Volcker was involved in Nixon’s decision to close the gold window and thus usher in the fiat dollar standard which we now find is on its last legs. At the time, he was the Undersecretary for Monetary Affairs under Treasury Secretary John Connally.

The task of reversing the 15% inflation rate and interest rates of 21% was not an easy one. Volcker was well aware of the political consequences of ratcheting down money growth in a weak economy. During this time, gold had reacted predictably by going from $35 per ounce in 1971 to over $800 in 1980. But since the gold price reflects dollar confidence, or the lack thereof, this was annoying to Volcker. He declared that gold, and those who “speculated” in it, were the enemy. Actually, the gold price was a helpful indicator since once the money supply growth was restrained the gold price drifted back to $300 per ounce. Volcker had a tough job, but the problem was created by the Fed and the failure of the Bretton Woods pseudo-gold standard—both of which caused the financial crisis of the 1970’s. It was the absence of an honest gold standard that was the problem. Gold was not the enemy.

During this period of turbulence Chairman Volcker invited me to a private breakfast with him and his aide. Lew Rockwell, my chief of staff at the time, accompanied me. Lew and I, along with Volcker’s staffer, arrived first.  When Volcker arrived and before any greetings were exchanged, he immediately went to his aide and with some urgency asked: “What’s the price of gold”? In reality what he was asking: “How’s the dollar doing? The price was somewhere in the $700 range. It impressed me how important the gold price was to him. We had a cordial breakfast, which dealt with some legislation he was anxious for me to support. Volcker, although part of the establishment, came across as decent and respectful.

Since leaving the Fed Volcker has indicated that he’s open to the proposal for a new Bretton Woods type arrangement. He’s always favored a rule-based system. I believe he now recognizes, due to the mess we’re in today, we need some central bank rules that incorporate gold. This is a break with the narrative, and shows that even central bankers are concerned that the current system needs reformed. It shouldn’t be difficult to convince any reasonable observer that Bretton Woods was a complete failure— and its replacement, the fiat dollar standard, has caused a much greater world-wide crisis than we faced in the 1970’s.

In a private conversation I had with then president Ronald Reagan, about 10 years after the breakdown of the Bretton Woods Agreement, he stated flatly that: “any time a great nation went off the gold standard it no longer would remain great.” This has turned out to be an appropriate statement, since our “greatness” has been on the wane for quite some time.

Thoughts on the History of Gold and its Moral Significance

Throughout history, governments have defrauded their people by debauching the currency. Gold was required time and again to restore confidence in currencies and to reestablish economic order. If history is any guide, gold will play a significant role in the monetary system again. This will be met with stiff resistance from those who are currently in charge of the monetary system, and from some of those who are offering cryptocurrencies as an option. The option to use gold or cryptocurrencies requires that governments permit legal competition to their money monopoly. That will not be achieved easily.  

When it comes to competing currencies, gold with its very long history, has an edge over the recent efforts to devise a currency using blockchain technology. Gold must first be understood if it’s to be challenged by advanced technology. Understanding the role of government in monetary affairs, something that has existed throughout history, is also required. This is true regardless of whether the replacement for the fiat dollar system is precious metals, modern technology, or both.

The special nature of gold, its beauty and usefulness, has been recognized from the beginning of time, even before it was used in trade. The first evidence of a written language was approximately 3400 BC. There’s evidence that Egyptian pharaohs valued gold in a special manner, as it was used in religious ceremonies and incorporated in the ancient pyramids as early as 3000 BC. Purifying gold by smelting was accomplished as early as 3600 BC by the Egyptians. This enhanced its beauty and value, inviting its use in art and jewelry.

It took a long time before the first international gold standard was established by King Croesus of Lydia in 564 BC. This sequence of events is important for understanding the difference between a market developed commodity money and a government fiat system. Some modern day anti-gold economists argue that because Croesus arbitrarily chose to make the first coins out of gold, others followed until it became a common practice. They claim that if he had picked any other metal it would have sufficed as money of choice; at least until the fraud of fiat money could be established.

This is essentially the argument Bernanke made when he dismissed gold as a monetary metal, arguing that central banks held gold merely out of “tradition.”  Of course, that is complete nonsense. Even before gold coins were minted, gold was eagerly sought after and was used in trade and for estimating value. This was awkward because there was no identifiable unit of account and retail transactions were done with barter. When coins of dependable weight and purity were introduced, it tremendously enhanced retail transactions, domestically and internationally.

Interestingly, one of the first things Croesus did was to pass a law prohibiting private citizens from minting their own coins. Gold, by its very nature as a precious metal, was chosen by the marketplace as natural money. Croesus did not pronounce gold as money by edict. The market did it when the people recognized the special characteristics that a commodity must have to function efficiently as money. Over the centuries various commodities have been used as money, many times on a temporary basis in times of emergency, but gold and silver have survived as the precious metals of choice to be used in providing a sound currency.

Whether it’s been tobacco, beads, sea shells, bronze, copper, salt, stones, alcohol, tea, or various grains tested as money, their usefulness was quite limited compared to precious metals. It was soon understood that for a currency to be efficient, it must serve as a standard of value.

Direct barter was very inefficient as a means of exchange, yet it lasted for thousands of years while greatly restraining the advancement of civilization. Replacing bartering with commodity money gave a great boost to productivity and the standard of living of average citizens. Like most great discoveries, the idea of sound money was challenged by governments. Rulers want to control money as a way to secure wealth and maintain power. It started with King Croesus when he monopolized the world’s first coinage 2600 years ago, and it continues today with the Federal Reserve clinging to its authority to manage the worldwide fiat dollar system, even though it has caused havoc with our current financial system.

In time, it was acknowledged that lugging heavy bags of gold around for larger purchases was impractical and that substitutes for the precious metals would be helpful. Though great benefits were achieved from this change, it invited abuse and counterfeiting of the certificates representing claims to actual metals. Even before the introduction of promissory certificates, impure and false weight coinage was known to be us


Man’s yielding to immorality and temptation has been with us from the beginning of time, and it has always been a concern when dealing with the issue of money. Biblical history is explicit in advocating morality and honesty in all weights and measures. For hundreds of years alchemists searched for the philosopher’s stone, hoping to convert lead into gold among other ambitions. They were more like early chemists and didn’t qualify as a typical modern-day counterfeiter. But their motivation to produce gold showed how they considered it the number one choice to be used as money.

Egyptian Arabs in the 7th Century were active in this effort to convert lead into gold. It was not just to have more gold money; they saw gold as something very special and even spiritual, with many potential uses. If they had been successful it would have diminished the benefits of gold as money due to its naturally limited supply. The alchemists believed that it was the “perfect metal” in general, while all other metals were deemed inferior. It was believed that gold had medicinal benefits, which turned out to be true in modern times. It’s interesting that most of the great religions recognized this uniqueness as did the kings and pharaohs. The Magi, in recognizing Jesus as a newborn King, brought gold as a gift to celebrate his birth. It’s this special attitude that also made gold, for thousands of years, the most acceptable of all items used as money.

Gold and silver frequently are mentioned in the Bible as money. From Genesis to Revelations there are 417 references to gold and 320 to silver. Their rarity and beauty were instrumental in achieving this special attention that helped promote them as monetary metals.

Although gold was used in religious ornaments and recognized as something special and superior to other metals (and thus became money), it also motivated crime and corruption. Wars have been fought over gold throughout recorded history. And power struggles have been resulted over gold stores needed to pay the expenses of armed conflict. Christ was motivated to throw the corrupt money changers out of the temple, showing his contempt for dishonest dealing in money.

Even today we see various countries, fearful of a major financial crisis, compete in many ways for the world’s gold. Government and insiders rig gold and silver prices to serve their special interests, which is currently still a common practice. In spite of a constant effort by the so-called monetary experts to de-emphasize the importance of gold as universal money, by holding down the market price of gold for their benefit, it only works in the short term. Market prices always prove superior to all government wage and price controls, even if it takes time and an underground market to sort out real value.

The earliest mentions of honesty in money and the significance of gold as money were recorded three to four thousand years ago in the Torah, the first five books of the Bible written by Moses, which recognizes that gold and silver were early examples of money. Since it represented a weight of a precious metal, the admonition for “honest weights and measures” was spelled out early and often in the Bible. Not using an honest weight in any commodity transaction was considered theft. Today, the deliberate debasement of our currency by monetary authorities is theft, and equivalent to counterfeiting. Our Founding Fathers saw counterfeiting as a serious crime, deserving the death penalty.

Reasons why Gold and Silver Became the Premiere Money

It has been estimated that primitive bartering was used as early as 100,000 years ago. The importance of commodity money, especially gold and silver, started about 6,000 years ago; a comparatively new discovery. Gold and silver, due to their special qualities, were chosen early on as the money of choice to replace barter and facilitate more efficient trading of goods and services. Though gold was accepted quite naturally over time as superior to barter, we have discovered the reasons why and the unique significance of this process only over time.

Precious metals were voluntarily chosen as money by the people and were not designated as such by government force. Very early on though, once the importance of money became obvious, governments took control of those metals.

Today, the characteristics of a commodity that make it acceptable as money are generally agreed upon. When these characteristics are abandoned and government, for nefarious reasons, forces a fraudulent substitute on the people, a fiat currency is established. It is then no longer a commodity money convertible into something tangible.

There are specials characteristics of gold (and silver) that satisfied the people looking for the most practical metal to be used as money.

1) Beauty; sought after for ornaments and jewelry.

2)Easy to identify; not difficult for the average person to recognize.

3) Limited supply; work and effort required to increase the supply, independent of the government.

4) Easily divisible; can produce coins of precise weights.

5) Portable; convenient to use in small retail trade.

6) Durable; most gold ever mined is still in existence.

7) Precise definition; by weight and quality.

8) Difficult to counterfeit.

9) Tangible; when confidence is questioned in a monetary substitute, its authenticity can easily be checked by converting it into gold or silver or whatever substance was promised. This characteristic is the brake that limits the ability of money managers to debase the currency. History shows that the temptation to gain wealth and power without work and effort is overwhelming and must be enthusiastically guarded against.

10)Morality; gold may be the best choice for a sound monetary system but it is limited by the moral stature of those who guarantee the system, whether they are in or out of government.

Closely related to the characteristics of commodity money, that took years to precisely identify, are its functions that need to be understood. There are three main functions that should be fulfill:

1) A store of value.

2) A unit of account to serve as a standard of value, and

3) A medium of exchange.

A store of value makes money useful and conveys confidence that its purchasing power will not be arbitrarily diminished by the creation of additional units out of thin air by government authorities. Ships have sunk, laden with gold and silver coins, only to be recovered hundreds of years later with the purchasing power of the gold or silver coins intact. This does not happen with fiat currencies. A 30 year US bond, by contrast, loses value because the dollar is a fiat currency rather than a sound currency.

A well-defined unit of account, by weight and quality, becomes the yardstick for measuring economic value. The purchasing power of each unit can fluctuate, but the definition of the particular unit should be rigid. The supply and demand for the monetary unit affects prices, just as the supply and demand for the product or service being purchased does. This understanding precludes the practical use of bimetallism, which attempts to fix the ratio of gold to silver.

A practical medium of exchange is the most important function for a commodity used as money. Hundreds of different items have been tested over the centuries and their efficiency as money depended on the circumstances that existed at any one particular time. Water in a desert may be superior to a gold coin. Emergency conditions that exist with a war or a natural disaster may provide a temporary incentive to use different commodities as money.

The monetary choice should always be made by the people themselves and not imposed or prohibited by the government. Fraud in dealing with the monetary unit should never be tolerated. Promises that substitutes or certificates issued for a currency are backed by a commodity mean nothing if there is no guarantee of convertibility. When there is no guarantee, a commodity backed currency becomes a fiat currency. That is what occurred with the breakdown of the Bretton Woods Agreement in 1971. The dollar then became a pure a fiat currency which ushered in the current and worst ever, worldwide currency and financial crisis.

The Ultimate Consequences of Fake Money

Various types of fiat currencies have been used for centuries and they have all ended badly. They not only present a danger to economic prosperity, but they undermine liberty as well.

The current dollar standard is the largest fiat system the world has ever seen. Since 1971, when the dollar became a 100% fiat currency, gross distortions in the international financial and political system have resulted. Since the current environment has been built on false information, generated by monetary and interest rate manipulation and made worse by sub-prime lending, the amount of worldwide debt and mal-investment have reached record highs. Natural market forces always require the liquidation and correction of the excesses that the central economic planners cause by monetary manipulation. If sound economic growth is ever expected to return to the world economy, the excesses of the past 17 years must be dealt with. The problems that will come with this adjustment are huge, and will be both economic and geopolitical. How long and painful the correction is depends on government policy, and how serious we are about instituting sound money.

Paper money never lasts for long periods of time.

Commodity money like gold and silver can last for thousands of years.

Fiat money is institutionalized by government, which guarantees its mismanagement.

Fractional reserve banking and its shortcomings are close companions of fiat money and inflation.

Creating money out of thin air is a politician’s delight and a powerful tool for incumbents. Paying for extravagant spending can be delayed for long periods of time and the beneficiaries don’t pay; innocent victims do.

Deficits are facilitated by the Fed’s willingness to monetize them, which would be impossible with a commodity defined currency.

Subprime interest rates add to the problem of a central bank assuming it knows how to fix rates better than the market place.

Fiat money opens the doors for government spending that the endless numbers of special interest groups lobby for. This is the reason both conservatives and liberals never challenge the Fed. Both sides have their reasons for spending and neither side shows any concern for deficits.

Being able to create money out of thin air guarantees that spending will rise, government will grow, deficits will grow, and the nation’s wealth will shrink.

The longer the fiat system lasts, the greater will be the sacrifice of liberty which will be maintained with a deception of reality.

Under a fraudulent monetary system, debt in real terms becomes impossible to pay and the required debt liquidation can be accomplished only by debasement of the currency.        

Fake money rewards the special interests most closely associated with money managers: The Deep State, the military industrial complex, Wall Street, and the many beneficiaries of government spending.

Unfair distribution of wealth is a characteristic of a fiat monetary system and is seen today in its extreme, with the three richest people in the US owning more than the bottom 50% of world’s population.

This is not a new phenomenon and always leads to social and civil strife. Authoritarians and demagogues promote tyrannical solutions to an unnatural inequality that was largely facilitated by dishonest money, false promises, ignorance of economics, and loss of love for liberty.

Fiat money abhors morality and creates an immoral society. It requires rejection of a convertible commodity standard, and can be enforced only with powerful legal tender laws.

Economic bubbles are creatures of fiat currencies and central bank manipulation of the money supply and interest rates.

A fiat currency eliminates a definable unit of account which is needed for sound economic calculation.

A world run using fiat currencies, each defined by its relationship to the US dollar as the world’s reserve fiat currency, guarantees that competitive devaluations, trade imbalances, and trade wars will occur.

Economic conditions fueled by fiat currencies make wars, black markets, and bartering all more likely. Legitimate substitutes and other monetary commodities are not fiat money.

Anyone who thinks that peace and prosperity are worthy goals must reject fiat currencies.

Recovering from the damage caused by a fiat currency is much more difficult than rejecting        the temptation to initiate a fiat currency as the unit of account in the first place.

Honest money is a required ally of LIBERTY

Are Cryptocurrencies the Answer?

(Analysis is political, economic, historic; not an assessment of blockchain and distributed ledger technology).

Gold and silver imperfectly served our monetary needs from our early history until 1971, when the last official link of the dollar to gold was severed. Even with the intervals of suspension and abuse, the importance of dollar convertibility was acknowledged, though under Bretton Woods, it was reserved only for foreign holders of dollars. This pseudo-gold standard failed to restrain the Federal Reserve from excessively creating dollars at will, and it accommodated Congress’s march toward the welfare-warfare state, financed by deficits. Predictably, this process led to the total collapse of the Bretton Woods Agreement and ushered in the era of the fiat dollar and its reign as the reserve currency of the world. This literally has provided a license to steal for the US government, and has ushered in the current financial crisis. The dollar is in the process of being dethroned from its special status and the turmoil of finding a replacement has begun.

Will precious metals return to serve as the foundation to a new system, or will the recently developed concept of cryptocurrencies participate in a new monetary order? The proper course is to make certain that free people in the marketplace make the choice whether the use cryptos, absent the dictates of government and central banks. This process requires the rejection of the use of force and fraud for any chance of achieving success.

Competition in seeking an efficient monetary unit is required in deciding whether or not modern technology, using the blockchain concept, can create a currency that will challenge the historic acceptance of precious metals as money. A decision of this magnitude will take a significant amount of time to achieve a consensus.

In the event of a total economic collapse, spontaneous use of various dollar substitutes likely would occur. This adaptation has been used throughout history, especially during wartime and other emergency conditions. Let’s hope our leaders come to their senses before we have a Venezuela-like crisis— when the necessary reforms can be accomplished more smoothly, in an environment of legalized competing currencies. The marketplace is quite capable of sorting out the advantages and disadvantages of cryptocurrencies and precious metals. The biggest challenge will be to get the government out of the way to allow this choice.

It’s conceivable that cryptocurrencies, using blockchain technology, and a gold standard could exist together, rather than posing an either-or choice. Different currencies may be used for certain transactions for efficiency reasons. The desire for storage and speed can make a difference in choosing a currency. It appears that decentralized ledger technology will also be useful outside the sphere of digital currencies. A combination of gold and crypto will prove to be a lot more achievable than getting people to adapt to a totally new concept of money.

Privacy will always be a concern to those who seek to avoid constant surveillance by the state, even when it’s for many reasons other than taxes. Retail trade, under primitive conditions associated with a currency crisis, will lend itself to using tangible precious metals in preference to a digital cryptocurrency requiring active networks. Large transactions, at greater distances, may best be served by a proven and trusted cryptocurrency however.

The greatest challenge will be satisfying the need to provide a currency with a precise definition of the unit of account. It cannot be arbitrary, or confidence will not be achieved with any substitute or proposed reform of the dollar. It was because a determined effort to maintain a precise definition of the dollar was abandoned in 1971 that the dollar became fiat and ushered in the financial/debt crisis that the world now faces.

The challenge today is to look to the knowledge accumulated over thousands of years about the nature of money and apply it to modern day technology. A workable currency must convey confidence because that’s critically important to the average person. A guarantee that the monetary unit can be easily and reliably exchanged for something of real value is crucial.

Throughout history all currencies, though they were made popular in the market place, inevitably were taken over by government or a banking entity. Since that will continue, every effort must be made to keep the management of the monetary system out of the hands of government officials. Hopefully, modern technology will help keep financial transactions private. Cryptocurrencies are designed to keep business activities anonymous, yet transparent, with blockchain technology that permits rapid transmission and storage of information.

Because of the aggressive nature of government taxing authorities, with the power they wield due to the guns they carry, they will have the upper hand in ignoring our 4th Amendment rights. This we know is just as true under a commodity standard of money. In the midst of economic and political chaos or a severe currency crisis, simple barter and exchange of precious metal coins could end up serving as the ultimate survival tool. Long term reform of the monetary system needed in order for society to survive is another matter.

After a very long period in monetary history, primitive bartering was steadily replaced with precious metal coinage and the use of substitutes. More rapid forms of communications, used in domestic and international trade, tremendously improved monetary transactions over the centuries. Supporters of cryptocurrencies and blockchain technology are optimistic that such technology will provide faster communications and more efficient record keeping with modern-day distributed ledger technology. The goal is to keep all transactions both transparent and anonymous without paying bank transaction fees. Adapting to the regulators and the taxing authorities, while curtailing illicit expansion of the currency supply, will prove to be a challenge.

For society to advance to the point of accepting a truly denationalized monetary system, a significant amount of energy will be required to rein in the power of government authoritarians. A modern day currency needs an enlightened attitude about what the proper role for government ought to be in a civil society.

Technological advances over the past two centuries were vital in eliminating the cumbersome system of monetary exchange that existed with barter, and problems making direct trades with precious metals without the benefit of substitutes. Technological advances permitted rapid transfers of monetary assets over great distances.

Many changes have occurred since prehistoric times when human exchanges were done on foot or with assistance from animals and carts. Water was transported by sailing ships, for the purposes of exchange and barter for goods, even before precious metals were used as money. For thousands of years these exchanges were slow and inefficient.

Travel for the purpose of fighting wars and trading, remained tedious and slow up until the beginning of the industrial age in the early 19th century. Sailing across the Atlantic in the 18th century and the early part of the 19th, using only wind power, would generally take six weeks. Business transactions and financial activities across the Atlantic in that period were carried out at a snail’s pace.

The steam engine changed all of that. During almost the whole 18th century many inventors experimented with steam power. It was first used for pumps that provided tremendous assistance in the mining industry. The 19th century was a different matter. Steam power initiated the Industrial Revolution, along with dramatically increasing the speed of travel, financial transactions, and trade. This, along with the use of monetary substitutes redeemable for actual gold, spurred international trade. Instead of lugging heavy bullion around the world, the use of certificates with a guarantee of convertibility was a great benefit to trade. But the speed of travel, by land or sea, continued to place limits on trade and economic growth.

The time to cross the Atlantic, after the advent of steam boats in the first half of the 19th century, was reduced from six weeks to a little over one week. But the transmission of information relating to financial transactions was about to become much faster.

A huge technological development occurred in 1844 that revolutionized the transmission of information. This benefitted news reporting, affected vital military strategies, and dramatically improved the transfer of financial information and monetary assets.

Sending a message via the electric telegraph was successfully accomplished for the first time on May 24, 1844, between Samuel Morse in Washington DC and Alfred Vail in Baltimore, Maryland. The memorable message: “What Hath God Wrought?” was quite appropriate and accurately reflected the huge significance of the age in which mankind was entering.

Up until that time, transmission of general information and monetary instruments was tediously slow and cumbersome. The world became much smaller with this invention. The Western Union Telegraphy Company successfully laid a transcontinental telegraph line in 1861. The first successful cable to cross the Atlantic happened in 1866. The spread of this technology worldwide was swift, dramatically changed the speed of all communications, and was especially beneficial in the area of banking and commerce. In 1871 Western Union started an amazingly successful business of wiring money to almost any place in the world. This represented an astounding improvement over sailboats, steam ships, and railroads. In the not too distant past, it took weeks to cross complete financial transactions across the Atlantic. This time was reduced to days and suddenly to minutes, and greater efficiency was yet to come.

The unbelievable sudden improvement in communication speed that was accomplished with the electric telegraph has not yet been matched. However, the quality and choices in transmission technology has continued to make astounding progress.

Dr. Gary North makes an interesting comparison of travel time for information. He points out that from the time of Christ to the inauguration of the electric telegraph, it went from 1.25 miles per hour to 186,000 miles per second. Even with many magnificent technological improvements in the 20th Century, none can compare to the degree of speed improvement that the telegraph achieved. This invention was a major historic event and its speed is relatively fixed to the speed of light. Although speed of transmission was no longer the issue, improvements to the quality and flexibility of electronic communication brought about miraculous developments which continue to this day.

Up until the age of the electric telegraph, the invention of the printing press in 1454 stood out as the greatest human achievement for spreading and preserving information.

It didn’t take long for telephone technology, developed in latter part of the 19th Century, to push the telegraph aside. In the 20th Century, new technology constantly became available that improved information transmission. The telephone was followed by the radio, television, fax machines, and the internet, all to be used for enhancing the quality of transfer and storage of information relating to all matters: social, medical, aeronautical, railroads, military, and financial.

The particular “vehicle” or “process” used for these improvements varied by wavelength, and complicated electronics and were recognized as tools to be used to facilitate the transmission of information.

Economic value came from entrepreneurs who provided marketable services to the public, like AT&T and Western Union, using telegraph technology. One could not own a unit of “telegraph technology,” or radio or TV waves. We can’t get a piece of the action by buying a “unit” of internet transmission. To participate financially in modern day internet technology, we have to invest in companies like Facebook or Google. The technical vehicle or process that permitted fantastic technology to be developed, technology like electricity and the telegraph, cannot be bought and sold like a share of AT&T stock.

A value for transmission service can be determined, but that is different than buying and selling a tangible asset.  If a technological process like emailing can’t be bought and sold, it cannot be used as a unit of account and would not qualify as money. One cannot monetize, with any precision, the activity that uses technology, but a service, like credit card transactions, can be provided for a fee. Services, financial assets, and money are each different from one another.

We can use technical science for advancing civilization, but no one can “own” it. As valuable as wheel technology was, no one ever bought and sold this technology as a piece of property. The question that can only be answered by the market place is whether or not blockchain technology is just another great scientific breakthrough, or can it, in combination with cryptography, become a functional currency? The basic question boils down to this: Do all new currencies need to be based on something tangible?

It appears that blockchain and distributed ledger technology, like all workable scientific discoveries, is innovative and has a fantastic future in multiple areas for efficiently transferring, storing, and securing information. It is not considered “tangible,” in the classical definition of a monetary unit. Time will tell if the modern ideas on crypto money will be adaptable to the old line of thinking about the nature of money.

Being able to wire money, as early as 1871, did not make the electric telegraph a currency— yet the technology used was the greatest invention up until that time for transmitting financial information and money, worldwide. The telegraph can best be described as a valuable “tool” in commercial transactions.

Speed and efficiency of transmission of information remains a challenge for both cryptocurrencies and banking transactions. According to Simon Black, banks have been caught flatfooted and are feverishly competing with the use of distributed ledger technology and cryptocurrencies. The development of advanced systems like the “New Payments Platform,” is being done and tested in a few banks in Australia. In the US, work is being done on an advanced program called “Real-time Payment” (RTP) system in hopes of replacing the commonly used, much slower process-  the ACH (Automated Clearing House).

An interesting question: how will all this technology affect the calculation of prices if the velocity of money soars, when fears are driven by runaway inflation? When the end stages of a fiat currency become evident, and all confidence is lost, chaos ensues and the need for reform becomes obvious. The need to carry bags of paper money around and spend it as quickly as possible to protect against a rapid depreciation and rampant price increases may never occur.  Knowing how to convert rapidly depreciating fiat money into a sound currency, of reliable value and in a way capable of storing that value, is crucial. Obviously, being prepared before the crisis gets out of control is preferable to watching and waiting until it’s too late to act.

Many people are already in the process of doing just that. An Egyptian billionaire recently put one half of his $5.7 billion into gold to protect from what he sees coming. As time goes on and the unraveling of the economy accelerates, a lot more people will be seeking protection from the monetary crisis.


Investors and politicians worldwide are waking up to the fact that the current economic system of debt and fiat money is unsustainable, and are quietly and secretly preparing for the worst. Governments will do what they always do in a financial crisis: protect insiders and those close to the Deep State.

Average middle-class citizens, already suffering from the corrupt monetary system, are scrambling to find the best way to protect their wealth and safety in these challenging times. Understanding how we got ourselves into this mess is key to preparing for the tough times that lie ahead.

All fiat currencies are self-limiting since they are based on fraud and are equivalent to counterfeit. Unfortunately, they can last for prolonged periods of time, only making the economic distortions much greater.

Prior to the establishment of the Federal Reserve in 1913, the US did reasonably well recognizing gold and silver as legal tender as the Constitution mandated. The Fed was started for various reasons, none of which included maintaining a sound currency backed by gold or silver. The fiat dollar did not arrive immediately after the Fed was established. It came seductively and slowly in a planned strategy between 1913 and 1971.

The dollar became a total fiat currency on August 15th 1971, the day Richard Nixon, by executive order, severed all links of the dollar to gold. This ushered in the radical and dangerous Age of Fiat, which solidified the American Empire and dollar hegemony. This con-game has been going on for nearly 50 year and the concern now is about when and how this house of cards comes down-not if.

Early on, the handwriting on the wall was recognizable when control of the monetary system was turned over to the Fed and its bank allies to operate in secret. Even at its inception, many recognized that the Deep State would be sure to protect their profits and pass their losses onto the people, and that in the long run a central bank would be devastating to our economy.

It didn’t happen overnight, but in the past 100 years we have inexorably marched toward the disaster which we now face. The climatic end to the fiat dollar standard is now on the horizon.

Major events occurred along the way warning us of the dollar’s vulnerability. FDR’s confiscation of gold from the American people in 1933 by executive order was a recognition of our bankruptcy. By this act the US government refused to honor its commitment to pay gold for the gold certificates it had issued.

After WW 2 further attempts were made to institute a global fiat currency, and the US dollar was the currency of choice. The Bretton Woods agreement created a pseudo-gold standard that was destined to fail, as Henry Hazlitt predicted at the time.

August 15th, 1971 confirmed that the fiat dollar would reign for the foreseeable future. Nixon’s order denying the convertibility of the dollar to gold to foreign holders concluded our declaration of technical bankruptcy, commenced by FDR in 1933. This act by Nixon should be known as an atrocious “act of infamy” for the world’s monetary system, from which we continue to suffer.

The problems that we now face are the predictable consequence of this experimental system of fiat money. It has been supported by an economic and political philosophy that promoted the odd idea that “printing” unlimited amounts of money and ignoring the dangers of debt creates wealth. This effort to establish a utopian society, managed by a benevolent US empire, was well received by many patriotic Americans. These well-laid plans for a permanent “guns and butter” economy have failed, and the piper is now demanding payment.

The unwinding of history’s largest financial bubble is now upon us, and presents many dangerous unknowns. As it evolves the seriousness of the challenge, not yet realized by most people throughout the world, will become readily apparent. Venezuela gives us an idea of what may be in store for those who are unprepared. Due to the return of primitive bartering in Venezuela, a haircut has been calculated to be worth five bananas and two eggs. Barter, to some degree, always returns whenever a nation’s money managers destroy the currency.

What will the scenario be like when the debt bubble bursts and dollar supremacy is challenged? What can we do about it? When will it happen? What is the biggest fear? Will it be limited to one or two countries? How long will the crisis last?

Unfortunately there are no precise answers to these questions. No one can anticipate and prepare for every possible problem that might arise.

We all must make an attempt to financially protect ourselves and our families and know who our true friends are. Providing for personal safety should be high on our list of concerns. There is no single answer for achieving these goals, as our circumstances vary from one to another. However, there are some facts to be aware of.

A government that bankrupts a country and destroys its currency will not provide for the economic needs of the people. Any promise to do so, should not be believed. Likewise, a bankrupt government, cannot provide physical safety. All government efforts will be designed to cling to power, by expanding it. Paying attention to the current catastrophic mess in Venezuela, gives us a hint as to what will happen, if we don’t wake up and change our ways.  That’s worth working for, but the odds are very slim that the American people are going to demand that the politicians in Washington quit supporting the welfare/warfare state.

The most important responsibility is to restore a love and understanding of liberty. It was the failure and desire of our government officials to protect liberty that caused this crisis. Without restoring the people’s liberty, survivalist efforts will not be enough to achieve peace and tranquility within the United States.

Our government did not hesitate to “steal” the gold savings of American citizens in the midst of the Great Depression, which was a consequence of Federal Reserve policy. This move kept it illegal to own gold in the US for the next 42 years. And today, there’s even less respect by our government for liberty than there was in the 1930’s.

We should do whatever we can to protect ourselves, our families, and our wealth, but we must remember that without liberty our greatest threat will come from our own government. Look at what has been lost since our leaders announced that we are in a permanent “Global War on Terrorism.” While our “foreign enemies” have been created by design, our “domestic enemies” have proliferated and present an existential threat to our freedom as we know it.

Let me offer some suggestions for what we should be doing to reform or change the system.

Striving for a voluntarist society should be our goal. This can be accomplished by:

  • Legalizing competing currencies.

  • No sales or capital gains taxes on money.

  • No tolerance of fraud.

  • Repealing legal tender laws.

  • Auditing the Fed; with an eye to abolishing it.

  • Expose the evil of fractional reserve banking for the fraud that it is.

Be aware, that anyone who promotes a cashless society is not a friend to freedom of choice in monetary affairs. I’m hoping that blockchain technology will not be a tool that advocates of the “value added tax” can use to enhance the power of the state to collect taxes. Technology experts will need to deal with this concern and reassure us or find an answer to prevent it. 


  • Audit the Pentagon, the CIA and all foreign expenditures.

  • No more bailouts of private or government entities.

  • To get through the crisis consider real estate, precious metals, and crypto ownership.

  • For some, expatriation may be an option.

But none of this is of any value if the government, at will, is allowed to expand its authoritarian rule and control our every move, every expression, every thought, and everything we own.

The most important investment we can make is to do whatever is humanly possible to protect the liberty of all persons. This is the responsibility of every one who has discovered the magical value of living in a free society.

The time has come for us to get engaged in the struggle to reignite an interest in the principles that motivated the Colonists to separate themselves from the British Empire.

We can start by talking about the necessity of a sound currency and the danger of central banking. The fact that Italy, not exactly the champion of laissez-faire economics, is talking about a parallel currency to compete with the euro may be telling us something.

We too, should make every effort to legalize competition to the US dollar and participate in the great debate over the fiat dollar, precious metals and crypto-blockchain technology. It may sound like only a concern about “money,” but it has everything to do with living in a free and prosperous society. Let the competition begin.

Published:6/23/2018 2:31:47 PM
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[Markets] Dow's 8 Day Losing Streak Set To End Amid Global Relief Rally

After yesterday's intraday risk reversal, which sent S&P futures from session highs just before the European open, to lows following a day of news with more trade war developments and renewed Italian concerns, while the Dow closed down for 8 sessions in a row, tied for the longest losing streak since 1978, markets appear willing to put it all behind as they close out the week, with futures rising to 12 points to 2,765 and just shy of session highs, while the Dow finally appears poised to end its losing streak.

The optimism was broad-based with European stocks rising and unwind much of yesterday’s Daimler-led risk-off moves, as European manufacturing and services PMI data beat analysts’ expectations, with the composite posting the first monthly rebound after 3 months of declines, lifting the EUR above 1.16, and sparking a short squeeze.

  • EU Markit Manufacturing Flash PMI 55.0 vs. Exp. 55.0 (Prev. 55.5)
  • EU Markit Services Flash PMI 55.0 vs. Exp. 53.7 (Prev. 53.8)
  • EU Markit Composite Flash PMI 54.8 vs. Exp. 53.9 (Prev. 54.1)

The EURUSD levitation however was interrupted by news that the German SPD party was preparing for new elections knocked the common currency back.

As a result, European equity markets rallied from the open, with the bank sector supported by Italian bank M&A news; Greek stock and bond markets outperform after EFSF repayment extension plan is confirmed.  Automaker and supplier stocks were the only segment to decline among the broader 19-industry Stoxx Europe 600 Index amid lingering concerns about China’s plan for retaliatory tariffs on U.S.-made vehicles and regulators’ crackdowns on diesel emissions. Core fixed income edges lower given general positive environment.

Risk sentiment benefited from reports that some U.S. officials were trying to restart trade talks with China before President Trump’s tariffs come into effect next month, which in turn sent the Bloomberg dollar index dropping for a third day, extending its weekly decline to 0.3%, the biggest since mid-April, as stretched positioning dictates price action with longs taking profit amid deescalation of trade war concerns.

In Asia, declines in Japanese and Hong Kong equities were offset by advances in their Chinese and Korean counterparts as investors awaited developments. The Nikkei 225 (-0.8%) saw early underperformance amid recent JPY strength, while Australia's ASX 200 (-0.2%) bucked the trend for most the session amid strength in financials led by ANZ Bank which announced to double its share repurchase. Elsewhere, trade concerns continued to cloud over the Hang Seng (+0.2%) and Shanghai Comp. (+0.5%) from the open, although stocks then recovered as participants also digested another net weekly liquidity injection from the PBoC.

In FX, the dollar and yen both fell against their major peers as reports that some U.S. officials were trying to resume trade talks with China damped demand for haven assets; euro hit one- week high. The Australian dollar led G-10 advance, as an oil rally helped to insulate spot against cross related selling; New Zealand’s dollar also rose versus most Group-of-10 peers. Elsewhere, the pound was up against most of the G-10 group on continued buying after the Bank of England’s Chief Economist Andy Haldane supported a rate hike.

The weakening dollar provided respite to Asian currencies under pressure from growing concern there will be a full-blown trade war.

In rates, treasuries edged lower, along with bunds as Thursday’s risk-off trade is unwound following Greece debt deal; Italian bonds bounced reversing some of yesterday's losses.

Oil jumped ahead of the conclusion of OPEC's summit, where the cartel is expected to announce a net 600,000 barrel increase in production (1MM nominal), although it remains unclear if Iran will endorse the decision. WTI traded higher as OPEC near an agreement on an output increase. Initially sources had suggested that ‘building [a] consensus [would] be a big challenge’ and ‘not all OPEC members [were] likely to accept the Ministerial Committee's proposal for an oil output increase of around 1mln BPD’. Whilse source reports had also suggested that Iran were doubting a consensus could be reached a more collaborative tone was struck after last minute talks and negotiations, with Iran stating that the meeting with the Saudi Oil Minister was positive. Following this multiple oil ministers confirmed that a compromise deal including a higher Iran quota may be part of the agreement and the 1mln BPD increase was an overestimation. The real effect is to be 700k BPD as according to the Nigerian Energy Minister.

Gold is up slightly heading in to the weeks end as the USD edges off of 11 month highs. Steel is set for the worst week in two months as the metal is eyeing losses once again on Friday. Copper is also set to fall on Friday as worries loom about falling Chinese demand due to trade concerns

Looking ahead, highlights include Canadian CPI and Retail Sales and the OPEC press conference. In the US, economic data include Markit manufacturing and Services PMI. CarMax and Blackberry are due to release results.

Market Snapshot

  • S&P 500 futures up 0.4% to 2,763.50
  • STOXX Europe 600 up 0.4% to 382.54
  • MXAP up 0.02% to 169.06
  • MXAPJ up 0.4% to 550.47
  • Nikkei down 0.8% to 22,516.83
  • Topix down 0.3% to 1,744.83
  • Hang Seng Index up 0.2% to 29,338.70
  • Shanghai Composite up 0.5% to 2,889.76
  • Sensex up 0.2% to 35,516.79
  • Australia S&P/ASX 200 down 0.1% to 6,225.23
  • Kospi up 0.8% to 2,357.22
  • Brent Futures up 1.4% to $74.05/bbl
  • Gold spot up 0.1% to $1,268.56/oz
  • U.S. Dollar Index down 0.3% to 94.61
  • German 10Y yield rose 1.5 bps to 0.35%
  • Euro up 0.4% to $1.1650
  • Brent Futures up 1.4% to $74.05/bbl
  • Italian 10Y yield rose 18.0 bps to 2.464%
  • Spanish 10Y yield fell 1.5 bps to 1.321%

Top Overnight News

  • International Monetary Fund Managing Director Christine Lagarde warned that financial markets could react violently to any fiscal loosening in large member states as the fund prepares for a mission to Italy.
  • Some White House officials are trying to restart talks with China to avoid a trade war before U.S. tariffs on Chinese products take effect July 6, three people familiar with the plans said, setting up a battle with others in the administration who favor a harder line
  • OPEC and its allies reached a preliminary agreement in the face of strong opposition from Iran to boost production by a theoretical 1 million barrels a day -- although the actual increase will be smaller as several countries are unable to raise output
  • Greece’s euro-area creditors struck a landmark deal to ease repayment terms on some of the nation’s mountain of debt, clearing the way for the country to exit the lifeline that’s kept it afloat since 2010
  • Economic momentum in the euro area unexpectedly picked up in June, although worrying signs persist for the common-currency region, IHS Markit said Friday
  • Turkish President Recep Tayyip Erdogan seeks re-election on Sunday. But he risks running into a demographic wall, as he may struggle to win the young vote -- one reason why the upcoming vote could be the tightest he’s faced
  • Greece’s euro-area creditors struck a landmark deal to ease repayment terms on some of the nation’s loans in an effort to ease its mountain of debt and clear the way for it to exit the lifeline that’s kept it afloat since 2010
  • U.K. Chancellor of the Exchequer Philip Hammond said he’s no enemy of Brexit as he slammed European Union proposals for cross-border financial services after Britain leaves the bloc
  • Nomura Holdings Inc. dismissed 28 sales and trading staff in the U.S., according to a person familiar with the matter

Asia stocks were somewhat mixed with the region cautious as trade concerns lingered and following a weak lead from Wall St where all major US indices closed negative and the DJIA declined for an 8th consecutive day to post its longest losing streak in over a year. As such, Nikkei 225 (-0.8%) saw early underperformance amid recent JPY strength, while ASX 200 (-0.2%) bucked the trend for most the session amid strength in financials led by ANZ Bank which announced to double its share repurchase. Elsewhere, trade concerns continued to cloud over the Hang Seng (+0.2%) and Shanghai Comp. (+0.5%) from the open, although stocks then recovered as participants also digested another net weekly liquidity injection from the PBoC. Finally, 10yr JGBs were relatively unchanged with prices sitting near 2-week highs, while the latest CPI data from Japan was largely ignored despite the headline being a tad firmer than expected as inflation remained far from the 2% price goal. In addition, today’s BoJ Rinban announcement also failed to spur demand as the central bank maintained all purchase amounts. PBoC injected CNY 40bln via 7-day reverse repos and CNY 30bln via 14-day reverse repos, for a net weekly injection of CNY 140bln vs. last week's CNY 240bln net injection.

Top Asian News

  • Sharp Is Raising as Much as 216 Billion Yen in Share Sale
  • Mahathir Says Ringgit’s Fair Value Is Same as Asia-Crisis Peg
  • What’s Wrong With Asian Stocks? Theories From Goldman and Others
  • Barclays Sees Rupee Suffering Worse Rout Than in Taper Tantrum
  • Hong Kong Dollar Strength Seen to Ease When Xiaomi Boost Fades

European bourses are largely higher (Eurostoxx 50 +0.8%) with bank stocks leading the gains on Friday, as fears over Italian Euroscepticism ease, as Borghi reiterates there is no intention to leave the Euro Zone. The energy sector was dragging on equities as OPEC accord tensions pressured the sector but bounced on a deal nearing closure. The SMI is currently the outperforming bourse whilst the DAX underperforms as trade concerns linger over German auto names and pressure on the index. French company specific news dominates newswires, with the French Government saying they have no intention of breaking up EDF (flat) into a nuclear and non-nuclear unit, as well as Airbus (+1.5%) on a positive note being circulated from JP Morgan.

Top European News

  • Euro Area Growth Unexpectedly Quickens as Slowdown Risks Persist
  • Greece’s Creditors Agree to Landmark Debt Deal as Payments Eased
  • Jooste Profited From Steinhoff Land Deal in 2007, Filings Show
  • Citadel Securities Has Swaps-Trading Bonanza in Italy Chaos
  • As U.S. Alliances Fray, Russia Courts New Customers for Missiles
  • Deutsche Bank Defendant Defies Prosecutors in Paschi Trial

In FX, the EUR has continued its firm rebound from post-Fed and especially ECB policy meeting lows, with upbeat preliminary PMIs for June providing additional momentum to extend recovery gains beyond 1.1600 vs the Usd and briefly challenging the 21 DMA around 1.1670. However, offers layered between there and 1.1700 are capping further upside for now, and reports that Germany’s SPD are preparing for an election also undermined the single currency. AUD/NZD: The major beneficiaries a pre-OPEC squeeze in oil prices and broad Greenback retracement in wake of yesterday’s disappointing US data (Philly Fed survey in particular), as the former regains 0.7400 and looks to close above a chart pivot circa 0.7413, while the latter is hovering around 0.6900. GBP: Building on post-BoE gains with Cable testing 1.3300 for a near 2 big figure bounce from worst levels in the run up to Thursday’s MPC policy revelations, but also meeting some technical resistance ahead of its 21 DMA (1.3310). CAD - Consolidating above 1.3300 against its US counterpart and eyeing crude ahead of OPEC like the antipodean dollars and other commodity currencies, but also looking towards Canadian CPI and retail sales data for independent impetus ahead of next week’s BoC outlook report. DXY - Finding some support around 94.500, but off fresh ytd peaks some 100 ticks higher on the aforementioned worse-thanforecast US releases and decent recoveries in rival trading partners.

In commodities, oil trades higher as OPEC near an agreement on an output increase. Initially sources had suggested that ‘building [a] consensus [would] be a big challenge’ and ‘not all OPEC members [were] likely to accept the Ministerial Committee's proposal for an oil output increase of around 1mln BPD’. Whilst source reports had also suggested that Iran were doubting a consensus could be reached a more collaborative tone was struck after last minute talks and negotiations, with Iran stating that the meeting with the Saudi Oil Minister was positive. Following this multiple oil ministers confirmed that a compromise deal including a higher Iran quota may be part of the agreement and the 1mln BPD increase was an overestimation. The real effect is to be 700k BPD as according to the Nigerian Energy Minister. Libyan oil ports had exacerbated the rise in oil, with a further storage tank catching fire due to domestic conflicts. However, Libya’s NOC has confirmed Ras Lanuf and Es Sider are under the control of Libya’s National Army, with fires now all extinguished. Gold is up slightly heading in to the weeks end as the USD edges off of 11 month highs. Steel is set for the worst week in two months as the metal is eyeing losses once again on Friday. Copper is also set to fall on Friday as worries loom about falling Chinese demand due to trade concerns.

Looking at the day ahead, the big data highlight is the release of the flash June PMIs around the world. In Europe and the US we'll receive the manufacturing, services and composite prints. Away from that the final Q1 GDP revisions will  be made in France. The Oil market will also be in focus with the OPEC meeting in Vienna (continuing into Saturday).

US Event Calendar

  • 9:45am: Markit US Manufacturing PMI, est. 56.1, prior 56.4
  • 9:45am: Markit US Services PMI, est. 56.5, prior 56.8
  • 9:45am: Markit US Composite PMI, prior 56.6

DB's Jim Reid concludes the overnight wrap

Happy Friday. I hope you didn’t notice the morning being slightly darker in the northern hemisphere today. These are those rare weeks where I go to bed in bright light and wake up in it too. Sadly this doesn’t last long. In a few weeks it’ll be totally dark getting up to write this!

So what has this slightly darker day got in store for us. Given the current nervousness on trade and growth at the moment there will be a lot of interest in today’s flash PMIs, especially in Europe. This morning in Asia we’ve already had the manufacturing PMI in Japan with the reading coming in at 53.1 compared to 52.8 in May. Later this morning we’ll get the data from Europe. The consensus for the composite Euro area reading is 53.9. As a reminder May printed at 54.1 which was the lowest since November 2016. The small drop is expected to be as a result of the manufacturing sector (55.0 versus 55.5 previously) while the services sector is expected to hold steady at 53.8. Germany’s composite is expected to stay at 53.4 and France’s also to hold at 54.2 (although both are expected to show further deterioration in the manufacturing sector). For the US this afternoon both the manufacturing and services readings are expected to fall a modest 0.3pts to 56.1 and 56.5 respectively.

We’ll also see the OPEC meeting today, so all eyes on how much supply they’ll add to the market. Ahead of this, overnight Bloomberg noted OPEC ministers have reached a preliminary agreement to boost production by a theoretical 1m barrels a day, although Saudi Arabia’s energy minister noted this number is “nominal, as the actual effect will be something less because not every country can respond”, so the real production increase may be c600k barrels a day. Notably with Iran’s oil minister walking out of the meeting and telling reporters that “it was not a good meeting”, we may have to wait until Saturday to see whether this proposal will be formally ratified. For now, WTI oil is up c1% this morning.

Elsewhere in Asia, markets are mixed but little changed with the Nikkei (-1.0%) and Hang Seng (-0.27%) both lower while the Kospi (+0.19%) and Shanghai Comp. (+0.35%) are up modestly as we type. Datawise, Japan’s May core CPI was steady mom and in line at 0.7% yoy. Meanwhile, China’s Commerce Ministry said it will impose anti-dumping tariffs on imported styrene from the US, South Korea and Taiwan – ranging from 3.8% to 55.7% and taking effect from 23  June.

China’s import of the chemical from the US is not huge ($4bn worth last year) and the potential for higher tariffs has been flagged back in February, but the announcement does come at a somewhat sensitive time which could add to the trade tensions. Elsewhere, all of the 35 largest US banks have passed the first part of the Fed’s annual stress test, suggesting they have enough capital to withstand an extreme recession. Reuters noted that next week’s tests are the ones to watch as they’ll likely be tougher and the results will be used to determine whether the Fed approves or denies banks’ capital plans.

Yesterday was a slightly odd day as markets started to step up their focus on the impact of the potential trade war on a day where there was actually some hope that there was still a chance of a near term de-escalation. Daimler’s profit warning from Wednesday night which we reported yesterday was the catalyst even if the link to trade in their warning was perhaps exaggerated. Meanwhile Italy had a bad day due to the appointment of two eurosceptic in key parliamentary posts with a sales tax on US internet companies adding to the risk off. In truth Daimler’s issues (shares -4.90%) also included diesel and emissions problems so the trade element may have been slightly exaggerated especially as tariffs haven’t come in yet for them.

At a macro level China was reported by MNI as engaging with the U.S. to deescalate the Trade War. The story quoted “a source with knowledge of the matter” saying that China trade officials have approached US officials in order to find ways to minimize punitive tariffs on China. It went on to say that China and US are making last minute efforts to avert the tariffs’ implementation (the $34bn from July 6th). Note that this is not to do with the additional $200bn Mr Trump highlighted on Monday. Meanwhile, Bloomberg also cited that some White House officials are trying to restart talks with China too. Having said that, Wilbur Ross’s comments suggested less diplomacy around the corner. He said that “If it really does get to be a big war, we have many more bullets than any of these other countries”.

On Italy, the Senate selected economist Alberto Bagnai as head of the finance committee. He has written two books calling for the monetary union to be dismantled. I read the review of one of the books on Amazon and it said “As serious as euroscepticism can get”. This was from a guy called Billy! The role of head of the budget committee in the lower house was given to Claudio Borghi who is an economic adviser for the League party and one that has been involved in the mini-bots discussion which as a reminder started the serious sell-off a month ago. Italian 2 and 10yr yields rose +26.9bp and +18.1bp respectively while the 10y Bunds / BTPs spread also rose 22bp to 239bp.

Elsewhere the US Supreme Court announced that it will allow states and local government to start collecting sales taxes from internet retailers that don't currently charge. Wayfair Inc. initially dropped -9.5% following the court decision but pared back losses to close -1.6% after the company said it doesn’t expect “any noticeable impact”. Other online retailers also pared back declines as investors considered whether the additional taxes would materially shift consumers’ buying behaviour, in part as the States were already collecting c75% of the potential taxes from online purchases as per the Government Accountability Office. In the end, eBay (-3.2%) and Amazon (-1.1%) both fell while bricks and mortar retailers were in demand yesterday (Walmart +0.7%; Best Buy Co. +1.8%).

With all this, it was a risk off day (S&P 500 -0.63%) with the Dow (-0.80%) down for the 8th day in a row. The last 8-day negative run was March 2017 but there’s only been 1 other outside of that (2011) since the GFC. The last 9-day slump was back in 1978 so we’ll see if today matches that! Back in Europe, the DAX was weighed down by car marker stocks (-1.44%) while Italy’s FTSEMIB led the decline following the political changes mentioned earlier (-2.02%). Meanwhile credit spreads widened with Main and Crossover up 2.8bp and 6.5bp respectively. Elsewhere, core government bonds were also boosted by the risk off tone (UST10y yields -4.2bp; Bunds -4.2bp) while other peripherals underperformed along with Italy (Spain +7.3bp; Portugal +4.6bp).

Gilts (-2bps) were caught in the crossfire between the risk off and a hawkish BoE meeting yesterday. The MPC’s decision to keep cash rates steady was widely expected, but it was slightly surprising that BoE’s Chief Economist Haldane dissented for the first time since 2014 and voted for a rate hike at yesterday’s meeting (vote of 6-3). The minutes indicated that the Bank regards recent data as consistent with its judgment that the very weak GDP growth reported in Q1 will prove temporary and that “all members agreed that the domestic labour market had remained strong, and there was widespread evidence that slack was largely used up. Pay and domestic cost growth had continued to firm broadly as expected”. Following the meeting, the Bloomberg implied odds of a rate hike in August jumped +20ppt to 56% while Sterling also reversed an earlier drop to end +0.52% higher against the dollar. It’s also worth highlighting that the MPC voted to change guidance on when they will consider reducing the stock of debt purchased in QE – from until the BoE rate reached 2% to 1.5%. Later in the day, it was also announced that the BoE will get an extra £1.2bn capital injection to allow the Bank to respond more immediately to any new financial crisis.

Ahead of Turkey’s election for this Sunday, DB’s Kubilay Ozturk noted that in its inaugural dual elections, Turkey will be voting to elect 600 members to the National Assembly and a new President. The latest polls point to the AKP +MHP alliance winning a majority in the Parliament and Erdogan retaining his Presidential mandate in the second round. That said, Kubilay highlights that momentum behind the opposition has picked up since mid-May, pointing to a non-negligible possibility of non-AKP majority in the Parliament confronted with an Erdogan Presidency. Another possibility is full opposition victory in both elections, which seems a low likelihood event, based on current poll data. History suggests markets favour political clarity following the ballot, as manifested in the knee-jerk reaction after the June 2015 (negative) and the November 2015 (positive) elections. Secondly, markets also look for clarity in macro policy outlook, depending on starting conditions. Dissipation of political uncertainty and advent of policy clarity are necessary but not sufficient. A sustainable rally requires accommodative global conditions, too. See his report for more details.

Before we take a look at today’s calendar, we wrap up with other data releases from yesterday. In the US, the macro data was broadly softer than expectations. The June Philly Fed business index fell 14.5pts mom to 19.9 (vs. 29  expected) - the lowest level since November 2016. In the details, the new orders index dropped from the May reading which was at a 45 year high (-22.7pts mom to 17.9), while both the prices paid and prices received indices moderated a little but remained at elevated levels. Meanwhile, firms reported order backlogs were diminishing and were less upbeat about business prospects in the next six months. The May CB leading index was also below market (0.2% mom vs. 0.4% expected) while the April FHFA house price index was up 0.1% mom (vs. 0.5% expected), leading to annual growth of 6.4% yoy. Elsewhere, the weekly initial jobless claims (218k vs. 220k expected) and continuing claims (1,723k vs. 1,710k expected) were broadly in line and remain at low levels, suggesting further tightening of labour market conditions.

The Euro area’s June consumer confidence index was below consensus at -0.5 (vs. 0) but still resilient considering the 10y average reading was -13. France’s June manufacturing confidence index was steady mom and above market at 110 (vs. 108 expected) while the business confidence reading was in line at 106. Over in the UK, the May public sector net borrowing (ex-banking groups) was lower than expected at £5bn (vs. £6.3bn).

Looking at the day ahead, the big data highlight is the release of the flash June PMIs around the world. In Europe and the US we'll receive the manufacturing, services and composite prints. Away from that the final Q1 GDP revisions will  be made in France. The Oil market will also be in focus with the OPEC meeting in Vienna (continuing into Saturday).

Published:6/22/2018 6:24:00 AM
[Markets] Paul Craig Roberts: "The Entire Western World Lives In Cognitive Dissonance"

Authored by Paul Craig Roberts,

In this column I am going to use three of the current top news stories to illustrate the disconnect that is everywhere in the Western mind.

Let us begin with the family separation issue. The separation of children from immigrant/refugee/asylum parents has caused such public outcry that President Trump has backed off his policy and signed an executive order terminating family separation.

The horror of children locked up in warehouses operated by private businesses making a profit off of US taxpayers, while parents are prosecuted for illegal entry, woke even self-satisfied “exceptional and indispensable” Americans out of their stupor. It is a mystery that the Trump regime chose to discredit its border enforcement policy by separating families. Perhaps the policy was intended to deter illegal immigration by sending the message that if you come to America your children will be taken from you.

The question is: How is it that Americans can see and reject the inhumane border control policy and not see the inhumanity of family destruction that has been the over-riding result of Washington’s destruction in whole or part of seven or eight countries in the 21st century?

Millions of people have been separated from families by death inflicted by Washington, and for almost two decades protests have been almost nonexistent. No public outcry stopped George W. Bush, Obama, and Trump from clear and indisputable illegal acts defined in international law established by the US itself as war crimes against the inhabitants of Afghanistan, Iraq, Libya, Pakistan, Syria, Yemen, and Somalia. We can add to this an eighth example: The military attacks by the US armed and supported neo-Nazi puppet state of Ukraine against the breakaway Russian provinces.

The massive deaths, destruction of towns, cities, infrastructure, the maiming, physical and mental, the dislocation that has sent millions of refugees fleeing Washington’s wars to overrun Europe, where governments consist of a collection of idiot stooges who supported Washington’s massive war crimes in the Middle East and North Africa, produced no outcry comparable to Trump’s immigration policy.

How can it be that Americans can see inhumanity in the separation of families in immigration enforcement but not in the massive war crimes committed against peoples in eight countries? Are we experiencing a mass psychosis form of cognitive dissonance?

We now move to the second example: Washington’s withdrawal from the United Nations Human Rights Council.

On November 2, 1917, two decades prior to the holocaust attributed to National Socialist Germany, British Foreign Secretary Arthur James Balfour wrote to Lord Rothschild that Great Britain supported Palestine becoming a Jewish homeland. In other words, the corrupt Balfour dismissed the rights and lives of the millions of Palestinians who had occupied Palestine for two millennia or more. What were these people compared to Rothschild’s money? They were nothing to the British Foreign Secretary.

Balfour’s attitude toward the rightful inhabitants of Palestine is the same as the British attitude toward the peoples in every colony or territory over which British power prevailed. Washington learned this habit and has consistently repeated it.

Just the other day Trump’s UN ambassador Nikki Haley, the crazed and insane lapdog of Israel, announced that Washington had withdrawn from the UN Human Rights Council, because it is “a cesspool of political bias” against Israel.

What did the UN Human Rights Council do to warrant this rebuke from Israel’s agent, Nikki Haley? The Human Rights Council denounced Israel’s policy of murdering Palestinians—medics, young children, mothers, old women and old men, fathers, teenagers.

To criticize Israel, no matter how great and obvious is Israel’s crime, means that you are an anti-semite and a “holocaust denier.” For Nikki Haley and Israel, this places the UN Human Rights Council in the Hitler-worshipping Nazi ranks.

The absurdity of this is obvious, but few, if any, can detect it. Yes, the rest of the world, with the exception of Israel, has denounced Washington’s decision, not only Washington’s foes and the Palestinians, but also Washington’s puppets and vassals as well.

To see the disconnect, it is necessary to pay attention to the wording of the denunciations of Washington.

A spokesperson for the European Union said that Washington’s withdrawal from the UN Human Rights Council “risks undermining the role of the US as a champion and supporter of democracy on the world stage.” Can anyone image a more idiotic statement? Washington is known as a supporter of dictatorships that adhere to Washington’s will. Washington is known as a destroyer of every Latin American democracy that elected a president who represented the people of the country and not the New York banks, US commercial interests, and US foreign policy.

Name one place where Washington has been a supporter of democracy. Just to speak of the most recent years, the Obama regime overthrew the democratically elected government of Honduras and imposed its puppet. The Obama regime overthrew the democratically elected government in Ukraine and imposed a neo-Nazi regime. Washington overthrew the governments in Argentina and Brazil, is trying to overthrow the government in Venezuela, and has Bolivia in its crosshairs along with Russia and Iran.

Margot Wallstrom, Sweden’s Foreign Minister, said: “It saddens me that the US has decided to withdraw from the UN Human Rights Council. It comes at a time when the world needs more human rights and a stronger UN – not the opposite.” Why in the world does Wallstrom think that the presence of Washington, a known destroyer of human rights—just ask the millions of refugees from Washington’s war crimes overrunning Europe and Sweden—on the Human Rights Council would strengthen rather than undermine the Council? Wallstrom’s disconnect is awesome. It is so extreme as to be unbelievable.

Australia’s Foreign Minister, Julie Bishop, spoke for the most fawning of all of Washington’s vassals when she said that she was concerned by the UN Human Rights Council’s “anti-Israel bias.” Here you have a person so utterly brainwashed that she is unable to connect to anything real.

The third example is the “trade war” Trump has launched against China. The Trump regime’s claim is that due to unfair practices China has a trade surplus with the US of nearly $400 billion. This vast sum is supposed to be due to “unfair practices” on China’s part. In actual fact, the trade deficit with China is due to Apple, Nike, Levi, and to the large number of US corporations who produce offshore in China the products that they sell to Americans. When the offshored production of US corporations enter the US, they are counted as imports.

I have been pointing this out for many years going back to my testimony before the US Congress China Commission. I have written numerous articles published almost everywhere. They are summarized in my 2013 book, The Failure of Laissez Faire Capitalism.

The presstitute financial media, the corporate lobbyists, which includes many “name” academic economists, and the hapless American politicians whose intellect is almost non-existent are unable to recognize that the massive US trade deficit is the result of jobs offshoring. This is the level of utter stupidity that rules America.

In The Failure of Laissez Faire Capitalism, I exposed the extraordinary error made by Matthew J. Slaughter, a member of President George W. Bush’s Council of Economic Advisers, who incompetently claimed that for every US job offshored two US jobs were created. I also exposed as a hoax a “study” by Harvard University professor Michael Porter for the so-called Council on Competitiveness, a lobby group for offshoring, that made the extraordinary claim that the US work force was benefitting from the offshoring of their high productivity, high value-added jobs.

The idiot American economists, the idiot American financial media, and the idiot American policymakers still have not comprehended that jobs offshoring destroyed America’s economic prospects and pushed China to the forefront 45 years ahead of Washington’s expectations.

*  *  *

To sum this up, the Western mind, and the minds of the Atlanticist Integrationist Russians and pro-American Chinese youth, are so full of propagandistic nonsense that there is no connection to reality.

There is the real world and there is the propagandistic made-up world that covers over the real world and serves special interests. My task is to get people out of the made-up world and into the real world. Support my efforts.

Published:6/21/2018 11:21:43 PM
[Markets] Nomi Prins: How Donald Trump's Trade Wars Could Lead To A Great Depression

Authored by Nomi Prins via,

Imperial President or Emperor With No Clothes?

Leaders are routinely confronted with philosophical dilemmas. Here’s a classic one for our Trumptopian times: If you make enemies out of your friends and friends out of your enemies, where does that leave you?

What does winning (or losing) really look like? Is a world in which walls of every sort encircle America’s borders a goal worth seeking? And what would be left in a future fragmented international economic system marked by tit-for-tat tariffs, travel restrictions, and hyper-nationalism? Ultimately, how will such a world affect regular people?

Let’s cut through all of this for the moment and ask one crucial question about our present cult-of-personality era in American politics: Other than accumulating more wealth and influence for himself, his children, and the Trump family empire, what’s Donald J. Trump’s end game as president? If his goal is to keep this country from being, as he likes to complain, “the world’s piggy bank,” then his words, threats, and actions are concerning. However bombastic and disdainful of a history he appears to know little about, he is already making the world a less stable, less affordable, and more fear-driven place. In the end, it’s even possible that, despite the upbeat economic news of the moment, he could almost singlehandedly smash that piggy bank himself, as he has many of his own business ventures.

Still, give him credit for one thing: Donald Trump has lent remarkable new meaning to the old phrase “the imperial presidency.” The members of his administration, largely a set of aging white men, either conform to his erratic wishes or get fired. In other words, he’s running domestic politics in much the same fashion as he oversaw the boardroom on his reality TV show The Apprentice.

Now, he’s begun running the country’s foreign policy in the same personalized, take-no-prisoners, you’re-fired style. From the moment he hit the Oval Office, he’s made it clear at home and abroad that it’s his way or the highway. If only, of course, it really was that simple. What he will learn, if “learning process” and “President Trump” can even occupy the same sentence, is that “firing” Canada, the European Union (EU), or for that matter China has a cost.

What the American working and the middle classes will see (sooner than anyone imagines) is that actions of his sort have unexpected global consequences. They could cost the U.S. and the rest of the world big time. If he were indeed emperor and his subjects (that would be us) grasped where his policies might be leading, they would be preparing a revolt. In the end, they -- again, that’s us -- will be the ones paying the price in this global chess match.

The Art of Trump’s Deals

So far, President Trump has only taken America out of trade deals or threatened to do so if other countries don’t behave in a way that satisfies him. On his third day in the White House, he honored his campaign promise to remove the U.S. from the Trans Pacific Partnership, a decision that opened space for our allies and competitors, China in particular, to negotiate deals without us. Since that grand exit, there has, in fact, been a boom in side deals involving China and other Pacific rim countries that has weakened, not strengthened, Washington’s global bargaining position. Meanwhile, closer to home, the Trump administration has engaged in a barrage of NAFTA-baiting that is isolating us from our regional partners, Canada and Mexico.

Conversely, the art-of-the-deal aficionado has yet to sign a single new bilateral trade deal. Despite steadfast claims that he would serve up the best deals ever, we have been left with little so far but various tariffs and an onslaught against American trading partners. His one claim to bilateral-trade-deal fame was the renegotiation of a six-year-old deal with South Korea in March that doubled the number of cars each U.S. manufacturer could export to South Korea (without having to pass as many safety standards).

As White House Press Secretary Sarah Sanders put it, when speaking of Kim Jong-un’s North Korea, “The President is, I think, the ultimate negotiator and dealmaker when it comes to any type of conversation...” She left out the obvious footnote, however: any type that doesn’t involve international trade.

In the past four months, Trump has imposed tariffs, exempting certain countries, only to re-impose them at his whim. If trust were a coveted commodity, when it came to the present White House, it would now be trading at zero. His supporters undoubtedly see this approach as the fulfillment of his many campaign promises and part of his classic method of keeping both friends and enemies guessing until he’s ready to go in for the kill. At the heart of this approach, however, lies a certain global madness, for he now is sparking a set of trade wars that could, in the end, cost millions of American jobs.

The Allies

On May 31st, Commerce Secretary Wilbur Ross confirmed that Canada, Mexico, and the EU would all be hit with 10% aluminum and 25% steel tariffs that had first made headlines in March. When it came to those two products, at least, the new tariffs bore no relation to the previous average 3% tariff on U.S.-EU traded goods.

In that way, Trump’s tariffs, initially supposed to be aimed at China (a country whose president he’s praised to the skies and whose trade policies he’s lashed out at endlessly), went global. And not surprisingly, America’s closest allies weren’t taking his maneuver lightly. As the verbal abuse level rose and what looked like a possible race to the bottom of international etiquette intensified, they threatened to strike back.

In June, President Trump ordered that a promised 25% tariff on $50 billionworth of imported goods from China also be imposed. In response, the Chinese, like the Europeans, the Canadians, and the Mexicans, immediately promised a massive response in kind. Trump countered by threatening another $200 billion in tariffs against China. In the meantime, the White House is targetting its initial moves largely against products related to that country’s "Made in China 2025" initiative, the Chinese government's strategic plan aimed at making it a major competitor in advanced industries and manufacturing.

Meanwhile, Mexico began adopting retaliatory tariffs on American imports. Although it has a far smaller economy than the U.S., it’s still the second largest importer of U.S. products, buying a whopping $277 billion of them last year. Only Canada buys more. In a mood of defiance stoked by the president’s hostility to its people, Mexico executed its own trade gambit, imposing $3 billion in 15%-25% tariffs against U.S. exports, including pork, apples, potatoes, bourbon, and cheese.

While those Mexican revenge tariffs still remain limited, covering just 1% of all exports from north of the border, they do target particular industries hard, especially ones that seem connected to President Trump’s voting “base.” Mexico, for instance, is by far the largest buyer of U.S. pork exports, 25% of which were sold there last year. What its 20% tariff on pork means, then, is that many U.S. producers will now find themselves unable to compete in the Mexican market. Other countries may follow suit. The result: a possible loss of up to 110,000 jobs in the pork industry.

Our second North American Free Trade Agreement (NAFTA) partner (for whose prime minister, Justin Trudeau, there is “a special place in hell,” according to a key Trumpian trade negotiator) plans to invoke tariffs of up to 25% on about $13 billion in U.S. products beginning on July 1st. Items impacted range “from ballpoint pens and dishwasher detergent to toilet paper and playing cards... sailboats, washing machines, dish washers, and lawn mowers.” Across the Atlantic, the EU has similarly announced retaliatory tariffs of 25% on 200 U.S. products, including such American-made classics as Harley-Davidson motorcycles, blue jeans, and bourbon.

Trump Disses the Former G7

As the explosive Group of Seven, or G7, summit in Quebec showed, the Trump administration is increasingly isolating itself from its allies in palpable ways and, in the process, significantly impairing the country’s negotiating power. If you combine the economies of what might now be thought of as the G6 and add in the rest of the EU, its economic power is collectively larger than that of the United States. Under the circumstances, even a small diversion of trade thanks to Trump-induced tariff wars could have costly consequences.

President Trump did try one “all-in” poker move at that summit. With his game-face on, he first suggested the possibility of wiping out all tariffs and trade restrictions between the U.S. and the rest of the G7, a bluff met with a healthy dose of skepticism. Before he left for his meeting with North Korean leader Kim Jong-un in Singapore, he even suggested that the G7 leaders “consider removing every single tariff or trade barrier on American goods.” In return, he claimed he would do the same “for products from their countries.” As it turned out, however, that wasn’t actually a venture into economic diplomacy, just the carrot before the stick, and even it was tied to lingering threats of severe penalties.

The current incipient trade war was actually launched by the Trump administration in March in the name of American “national security.” What should have been highlighted, however, was the possible “national insecurity” in which it placed the country’s (and the world’s) future. After all, a similar isolationist stance in the 1920s and the subsequent market crash of 1929 sparked the global Great Depression, opening the way for the utter devastation of World War II.

European Union countries were incredulous when Trump insisted, as he had many times before, that the “U.S. is a victim of unfair trade practices,” citing the country’s trade deficits, especially with Germany and China. At the G7 summit, European leaders did their best to explain to him that his country isn’t actually being treated unfairly. As French President Emmanuel Macron explained, “France runs trade deficits with Germany and the United Kingdom on manufactured goods, even though all three countries are part of the EU single market and have zero tariffs between them.”

Having agreed to sign on to a post-summit joint statement, the president suddenly opted out while on his flight to Singapore, leaving his allies in the lurch (and subsequently slamming the Canadian prime minister as “very dishonest” and “weak”). In that communiqué, signed by the other six summit attendees, they noted, "We strive to reduce tariff barriers, non-tariff barriers, and subsidies... We acknowledge that free, fair and mutually beneficial trade and investment, while creating reciprocal benefits, are key engines for growth and job creation."

The Pushback

The fallout domestically from the coming trade wars could be horrific if Trump truly makes good on his promises and refuses to back down, while the countries he’s attacking ratchet up their own responses, whether in terms of tariffs or simply a refusal to buy American goods. According to the U.S. Chamber of Commerce, up to 2.6 million American jobs could be threatened if, in the process, the U.S. also withdraws from NAFTA.

Even American CEOs are now running scared of the CEO-in-chief. recent survey conducted by the Business Roundtable lobby group, chaired by JPMorgan Chase CEO Jamie Dimon, revealed that their “economic outlook index” had declined this past quarter from a record high, the first drop in two years. According to the report, nearly two-thirds of the CEOs surveyed considered trade policy a "serious risk." Rather than planning future corporate hiring sprees, as Trump might have us believe, their fears of future trade wars actually seem to be curtailing job-expansion plans.

European leaders at the G7 summit admitted that, despite their own role in escalating global trade tensions, the coming wars “would hurt everyone.” And therein lies the danger and the disconnect. Thanks largely to Donald Trump, the leaders of the key countries on the planet could now proceed to destroy trade relationships, knowing full well that the results will hurt their workers and damage the global economy.

A recent report by Andy Stoeckel and Warwick McKibbin for the Brookings Institution analyzed just such a future trade war scenario and found that, if global tariffs were to rise just 10%, the gross national product (GDP) of most countries would fall by between 1% and 4.5% -- the U.S. GDP by 1.3%, China’s by 4.3%. A 40% rise in tariffs would ensure a deep global recession or depression. In the 1930s, it was the punitive U.S. Smoot-Hawley tariff that helped spark the devastating cocktail of nationalism and economic collapse that culminated in World War II. This time, who knows what The Donald’s tariffs will spark?

The End Game

When trade wars escalate and geopolitical tensions rise, economies can be badly damaged, leading to a vicious cycle of aggressive responses. And here’s the remarkable thing about the power of America’s imperial presidency in 2018: Donald Trump could unilaterally slow, alter, or under certain circumstances even shut down various elements of global trade -- and if he manages to do so, there will be a price to pay in jobs and in this planet’s economic stability.

Catalyzed by tweets, denunciations, insults, and the tariff-first shots of his administration, our allies will undoubtedly try to trade more with each other to close gaps that his trade wars open. Ultimately, that will hurt the U.S. and its workers, especially Trump’s base. For instance, German carmaker BMW, Japanese carmaker Toyota, and other foreign car companies employ 130,000 people in the United States. If, in response to new tariffs on their products, they were to begin moving their operations to France or Mexico in retaliation, it's American workers who would lose out.

But make no mistake: American allies, who rely on the staggeringly powerful U.S. market, will lose out, too. Weighed down by tariffs, their products will become less competitive here, which is what Trump wants. However, that won’t necessarily mean the end of trade deficits; it could just mean less trade everywhere, a situation that should bring to mind the global depression of the 1930s. And if you think Donald Trump is already a threat to world stability, imagine what might happen after years of economic duress. As was the case in the 1930s, when volatile conditions made it easier for dictators like Adolf Hitler to convince people that their economic woes stemmed from others, the path to a fire-and-fury world remains grimly open.

In Washington, Donald Trump’s unique version of the imperial presidency seems to be expanding to fill any void as alliances like the G7 that were once so crucial to the way the United States dominated much of the planet and its economy are being diminished. The question that should make anybody nervous is not yet answerable: What’s the end game?

The global economic system first put in place after World War II was no longer working particularly well even before President Trump’s trade wars began. The problem now is that its flaws are being exacerbated. Once it becomes too expensive for certain companies to continue operating as their profits go to tariffs or tariffs deflect their customers elsewhere (or nowhere), one thing is certain: it will get worse.

*  *  *

Nomi Prins is a TomDispatch regular. Her latest book, Collusion: How Central Bankers Rigged the World (Nation Books), was just published. Of her six other books, the most recent is All the Presidents' Bankers: The Hidden Alliances That Drive American Power. She is a former Wall Street executive. Special thanks go to researcher Craig Wilson for his superb work on this piece.

Published:6/21/2018 7:52:41 PM
[Markets] Princeton Course Will Teach Students 'How To Read Queerly'

Authored by Matthew Penza via Campus Reform,

Princeton University is offering a new course this fall that will teach students about the "theory, narrative, and aesthetics" of "queer literatures."

According to the official course description posted on the school's website, students will "both read from various trajectories of queer literature and engage what it means to read queerly" as part of the “Queer Literatures: Theory, Narrative, and Aesthetics” course.

"We will consider the historical etymology of the term queer and think through its affiliate terms and acronyms: lesbian, gay, bisexual, and trans," the description continues.

"We will investigate how discourses of power and institutions of normativity have come up against queer bodies, narratives, and politic—and how such encounters are historically situated."

The university goes on to explain that the throughout the course, students will be urged to "pay close attention to the ways in which desire, gender, and sexuality are queerly told."

The upcoming class is cross-listed in the Department of English, the Program in Gender and Sexuality Studies, and the Program in American Studies, and will feature readings by several authors and poets, including Eli Claire, Michel Foucault, James Baldwin, and others.

Claire's Exile and Pride: Disability, Queerness, and Liberation, an anthology on "disability politics," is described as an "intersectional framework for understanding how we actually live with the daily hydraulics of oppression, power, and resistance," as well as an "exploration of environmental destruction and capitalism, sexuality and institutional violence, [and] gender and the body politic" that calls for "social justice movements that are truly accessible to everyone."

Similarly, IRL by Tommy Pico is a novel that follows a protagonist who is "unsure of which obsessions, attractions, and impulses are essentially his, and which are the result of Christian conversion, hetero-patriarchal/colonialist white supremacy, homophobia, Bacardi, gummy candy, and not getting laid."

According to the description of the book, IRL asks "what happens to a modern, queer indigenous person a few generations after his ancestors were alienated from their language, their religion, and their history?"

Mean, the memoir of "queer spoken-word performer, visual artist, writer," and schoolteacher Myriam Gurba, will give students an opportunity to learn about the author's experience growing up "as a queer, mixed-race Chicana."

Through the lens of "radical formal fluidity," Gurba "takes on sexual violence, small towns, and race" in a "confident, intoxicating, brassy book that takes the cost of sexual assault, racism, misogyny, and homophobia deadly seriously."

"Being mean to boys is fun and a second-wave feminist duty," Gurba declares in an excerpt included in the book's description.

"Being rude to men who deserve it is a holy mission."

The reading list also includes Giovanni's Room by James Baldwin, a novel about a "young American expatriate" in Paris who is coming to terms with his homosexuality, and Foucault's sociological work The History of Sexuality, Vol. 1: An Introduction, with chapters focusing on "The Repressive Hypothesis," "The Perverse Implantation," "The Deployment of Sexuality," and more.

Professor Christina León, who is slated to teach the course, did not respond to Campus Reform's request for comment.

Published:6/21/2018 12:48:44 PM
[Markets] Regulators Stunned By Deutsche Bank's Spectacular, 12x VaR Trading Blowup

Until recently, Deustche Bank was best known for being the worst managed megabank in the world, for having attempted rigging and manipulating virtually every single market and getting caught doing it, for having been "secretly" added to the Fed's "troubled bank" watchlist, for having been told by the ECB to simulate a "crisis scenario", for "accidentally" transferring €28 billion to an outside account, and of course, for having some $50 trillion in gross notional derivatives on its books.

As of today it is also known for having reckless traders on "full tilt" who go all in, bet the house, and lose.

As first noticed by Bloomberg, and disclosed publicly in a May 7 Federal Financial Institution filing, unknown Deutsche Bank traders suffered a staggering one-day loss in the first quarter that was almost 12x VaR, or 12 times what DB's risk officers have estimated for regulatory purposes it might lose on a typical day.

"Even a loss of two or three times VaR on a given day is unlikely. Twelve times VaR is extraordinarily unlikely," MIT finance professor Andrew Lo told Bloomberg.

This loss, which is unrivaled in either Deutsche Bank history, or in other banks’ first quarter reports - was oddly left out of Deutsche Bank’s earnings report, and as BBG notes, "raises questions about U.S. regulators’ ability to have an accurate picture of a foreign bank’s operations if metrics such as value-at-risk, or VaR, show only a fraction of potential trading exposure." It also confirms that the Fed has ample reasons to be worried about a bank which is willing to not only gamble the house on some wild trade, but also lose as a result.

The staggering, record Q1 loss is more than 6x greater than the next largest disclosed VaR exception, that of BNP Paribas. Most banks were well under VaR as they should.

"Such a high trading loss is off the charts," said Gregor Weiss, a professor at Leipzig University and an expert in financial risk management. "It’s definitely something a supervisor will look into."

And they did: the issue of the giant loss, and subsequent attempted cover up (or at least lack of disclosure) is particularly stark at Deutsche Bank, which has increased capital levels at its U.S. business after multiple failed stress tests and cease-and-desist orders. More from Bloomberg:

Multiple U.S. regulators, including the Federal Reserve, inquired about the outsized loss, according to a person with knowledge of the discussions. Eric Kollig, a Fed spokesman, and Richard Loconte, a spokesman for New York’s Department of Financial Services, which supervises part of Deutsche Bank’s U.S. business, declined to comment

While Deutsche Bank didn’t disclose the size of the loss, one can back into it based on the disclosed average regulatory value-at-risk during the period which was was $30.8 million, which would imply that the total loss was roughly $400 million, although as Bloomberg caveats, because daily variations in the figure aren’t disclosed, it’s impossible to know what the exact loss was.

And since the gargantuan one-day loss took place in a quarter in which DB reported trading revenue of negative $64 million, indicating losses on trading positions - while the Barclays and Credit Suisse each reported more than $100 million of positive revenue - we can be further assured that this was indeed some spectacular trading blow.

According to Bloomberg calculations, the extreme day was one of four in the first quarter in which Deutsche Bank’s U.S. traders had a loss that surpassed the firm’s regulatory VaR estimate, however it is unlikely that any of the other three came even remotely close to 12x VaR.

Others did much better:

no other bank required to file quarterly reports with the Fed detailing significant trading activities had more than two such days, and none had a daily loss that even doubled its estimate, according to a review of the 33 filings from U.S. lenders and the local units of foreign firms. Deutsche Bank had just one such day all of last year. Exceeding the estimate too often causes a bank’s capital requirements to rise.

Needless to say, it’s been a tumultuous year for Frankfurt-based Deutsche Bank, which following a series of unfortunate events, reported the latest abysmal quarter. Days after the quarter closed, Deutsche Bank named Christian Sewing - previously its deputy chief of risk - to take over as chief executive officer.

If only more risk managers were at the bank at the time its traders were taking on 12x VaR risk positions, the quarter may not have been that terrible.

As for the consequences... "The firm finished a months-long strategy review shortly thereafter, announcing U.S. operations would significantly shrink as part of a global overhaul."

Some 10,000 workers are expected to be fired; it is unclear just how much of a factor that spectacular trading loss was in the CEO's decision to cut headcount by 10%.

As Bloomberg concludes, "a number of leaders and dealmakers in the U.S. have left the bank amid the shakeup. In a letter to staff this month, Sewing said the firm has taken steps to reorganize its business, bolster capital and reduce risks."

"Many of you are sick and tired of bad news," he admitted.

And now there's more.

Published:6/20/2018 2:13:55 PM
[Immigration] How Immigration Officials Cooked the Books and Fooled Congress for Years

A recent Justice Department report on U.S. immigration courts provides a rare glimpse into the difficulties faced by the Trump administration as it repairs the... Read More

The post How Immigration Officials Cooked the Books and Fooled Congress for Years appeared first on The Daily Signal.

Published:6/20/2018 1:43:04 PM
[Markets] Government Eyes Are Watching You: We Are All Prisoners Of The Surveillance State

Authored by John Whitehead via The Rutherford Institute,

“We’re run by the Pentagon, we're run by Madison Avenue, we're run by television, and as long as we accept those things and don't revolt we'll have to go along with the stream to the eventual avalanche.... As long as we go out and buy stuff, we're at their mercy… We all live in a little Village. Your Village may be different from other people's Villages, but we are all prisoners.

— Patrick McGoohan

First broadcast in America 50 years ago, The Prisoner - a dystopian television series described as “James Bond meets George Orwell filtered through Franz Kafka” - confronted societal themes that are still relevant today: the rise of a police state, the freedom of the individual, round-the-clock surveillance, the corruption of government, totalitarianism, weaponization, group think, mass marketing, and the tendency of humankind to meekly accept their lot in life as a prisoner in a prison of their own making.

Perhaps the best visual debate ever on individuality and freedom, The Prisoner (17 episodes in all) centers around a British secret agent who abruptly resigns only to find himself imprisoned and interrogated in a mysterious, self-contained, cosmopolitan, seemingly tranquil retirement community known only as the Village. The Village is an idyllic setting with parks and green fields, recreational activities and even a butler.

While luxurious and resort-like, the Village is a virtual prison disguised as a seaside paradise: its inhabitants have no true freedom, they cannot leave the Village, they are under constant surveillance, their movements are tracked by surveillance drones, and they are stripped of their individuality and identified only by numbers.

The series’ protagonist, played by Patrick McGoohan, is Number Six.

Number Two, the Village administrator, acts as an agent for the unseen and all-powerful Number One, whose identity is not revealed until the final episode.

“I am not a number. I am a free man,” was the mantra chanted on each episode of The Prisoner, which was largely written and directed by McGoohan.

In the opening episode (“The Arrival”), Number Six meets Number Two, who explains to him that he is in The Village because information stored “inside” his head has made him too valuable to be allowed to roam free “outside.”

Throughout the series, Number Six is subjected to interrogation tactics, torture, hallucinogenic drugs, identity theft, mind control, dream manipulation, and various forms of social indoctrination and physical coercion in order to “persuade” him to comply, give up, give in and subjugate himself to the will of the powers-that-be.

Number Six refuses to comply.

In every episode, Number Six resists the Village’s indoctrination methods, struggles to maintain his own identity, and attempts to escape his captors. “I will not make any deals with you,” he pointedly remarks to Number Two. “I’ve resigned. I will not be pushed, filed, stamped, indexed, debriefed or numbered. My life is my own.”

Yet no matter how far Number Six manages to get in his efforts to escape, it’s never far enough.

Watched by surveillance cameras and other devices, Number Six’s getaways are continuously thwarted by ominous white balloon-like spheres known as “rovers.” Still, he refuses to give up. “Unlike me,” he says to his fellow prisoners, “many of you have accepted the situation of your imprisonment, and will die here like rotten cabbages.”

Number Six’s escapes become a surreal exercise in futility, each episode an unsettling, reoccurring nightmare that builds to the same frustrating denouement: there is no escape.

As journalist Scott Thill concludes for Wired, “Rebellion always comes at a price. During the acclaimed run of The Prisoner, Number Six is tortured, battered and even body-snatched: In the episode ‘Do Not Forsake Me Oh My Darling,’ his mind is transplanted to another man's body. Number Six repeatedly escapes The Village only to be returned to it in the end, trapped like an animal, overcome by a restless energy he cannot expend, and betrayed by nearly everyone around him.”

The series is a chilling lesson about how difficult it is to gain one’s freedom in a society in which prison walls are disguised within the trappings of technological and scientific progress, national security and so-called democracy.

As Thill noted when McGoohan died in 2009, “The Prisoner was an allegory of the individual, aiming to find peace and freedom in a dystopia masquerading as a utopia.”

The Prisoner’s Village is also an apt allegory for the American Police State: it gives the illusion of freedom while functioning all the while like a prison: controlled, watchful, inflexible, punitive, deadly and inescapable.

The American Police State, much like The Prisoner’s Village, is a metaphorical panopticon, a circular prison in which the inmates are monitored by a single watchman situated in a central tower. Because the inmates cannot see the watchman, they are unable to tell whether or not they are being watched at any given time and must proceed under the assumption that they are always being watched.

Eighteenth century social theorist Jeremy Bentham envisioned the panopticon prison to be a cheaper and more effective means of “obtaining power of mind over mind, in a quantity hitherto without example.”

Bentham’s panopticon, in which the prisoners are used as a source of cheap, menial labor, has become a model for the modern surveillance state in which the populace is constantly being watched, controlled and managed by the powers-that-be and funding its existence.

Nowhere to run and nowhere to hide: this is the new mantra of the architects of the police state and their corporate collaborators (Facebook, Amazon, Netflix, Google, YouTube, Instagram, etc.).

Government eyes are watching you.

They see your every move: what you read, how much you spend, where you go, with whom you interact, when you wake up in the morning, what you’re watching on television and reading on the internet.

Every move you make is being monitored, mined for data, crunched, and tabulated in order to form a picture of who you are, what makes you tick, and how best to control you when and if it becomes necessary to bring you in line.

When the government sees all and knows all and has an abundance of laws to render even the most seemingly upstanding citizen a criminal and lawbreaker, then the old adage that you’ve got nothing to worry about if you’ve got nothing to hide no longer applies.

Apart from the obvious dangers posed by a government that feels justified and empowered to spy on its people and use its ever-expanding arsenal of weapons and technology to monitor and control them, we’re approaching a time in which we will be forced to choose between obeying the dictates of the government - i.e., the law, or whatever a government official deems the law to be - and maintaining our individuality, integrity and independence.

When people talk about privacy, they mistakenly assume it protects only that which is hidden behind a wall or under one’s clothing. The courts have fostered this misunderstanding with their constantly shifting delineation of what constitutes an “expectation of privacy.” And technology has furthered muddied the waters.

However, privacy is so much more than what you do or say behind locked doors. It is a way of living one’s life firm in the belief that you are the master of your life, and barring any immediate danger to another person (which is far different from the carefully crafted threats to national security the government uses to justify its actions), it’s no one’s business what you read, what you say, where you go, whom you spend your time with, and how you spend your money.

Unfortunately, George Orwell’s 1984 - where “you had to live - did live, from habit that became instinct - in the assumption that every sound you made was overheard, and, except in darkness, every movement scrutinized” - has now become our reality.

We now find ourselves in the unenviable position of being monitored, ma